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Reasons for the downward sloping demand curve

Reasons for the downward sloping demand curve

This continues the previous slide explanation of the reasons for the downward sloping demand curve. It emphasis the “income effect”, that as price drops, we are richer and tend to consume more.

1. Diminishing Marginal Utility

2. Income Effect

-At lower prices, current buyers are richer & will buy more.

Supply and Demand - slide 20 - on PowerPoint there is plenty of animation that is not shown here.

Click Here to go to Slide 21

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