wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

The downward-sloping demand curve can be explained in terms of ______ and ______.

A
the income effect
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
the substitution effect
No worries! We‘ve got your back. Try BYJU‘S free classes today!
C
both (A) and (B)
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
D
neither (A) nor (B)
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is B both (A) and (B)
The downward-sloping demand curve can be explained in terms of the income effect and the substitution effect. Income effect indicates that when the income of the consumer rises then the demand gets increased, and vice versa. Whereas, the substitution effect states that when the price of one good rises, the demand for the substitute good falls.

flag
Suggest Corrections
thumbs-up
0
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Growth rate
ECONOMICS
Watch in App
Join BYJU'S Learning Program
CrossIcon