Which of the following is a reason why the demand curve slopes downward?

• A. Producers supply less at lower prices, shifting the demand curve downward.
• B. The substitution effect causes consumers to buy more of a good when its price falls relative to other goods.
• C. Government intervention always forces the demand curve to slope downward.
• D. Higher prices always increase consumer income, leading to more demand.

Answer: (B)

Verified step by step guidance

1. Understand that the demand curve shows the relationship between the price of a good and the quantity demanded by consumers.
2. Recall that the demand curve slopes downward primarily because of the substitution effect and the income effect.
3. The substitution effect occurs when a price of a good falls, making it relatively cheaper compared to other goods, so consumers buy more of it instead of substitutes.
4. The income effect means that when the price of a good falls, consumers effectively have more purchasing power, which can increase the quantity demanded.
5. Recognize that producers' supply decisions, government intervention, or changes in consumer income due to price changes are not the main reasons for the downward slope of the demand curve.