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Ask a question to our educatorsWhy does the demand curve slope downwards?
For example, if you are looking at the demand curve for sugar, at the price of £3.00, 100 units of sugar is demanded, whereas at the price of £2.00, 200 units of sugar is demanded. This is intuitive as people generally buy more products that are lower in value. hence, the demand curve has a negative slope.
The income and substitution effect can also be used to explain why the demand curve slopes downwards. If we assume that money income is fixed, the income effect suggests that, as the price of a good falls, real income - that is, what consumers can buy with their money income - rises and consumers increase their demand.
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