Question

Which of the following are true?

a) Demand curve slopes downward because it is based upon law of diminishing marginal utility
b) Demand curve and demand schedule convey same information

• A. Both (a) and (b) are true
• B. (a) is true, but (b) is false
• C. (a) is false, but (b) is true
• D. Both (a) and (b) are false

Answer 1

Answer: (A)

Both (a) and (b) are true

a) Demand curve slopes downward because it is based upon law of diminishing marginal utility

b) Demand curve and demand schedule convey same information

Both the statements are correct since law of marginal utility states that as the consumption increases, the marginal utility tends to decline and the demand curve slopes downward because of diminishing marginal utility. Demand curve is derived from the demand schedule.