Which of the following generalizations about the demand curve is correct? Demand tends to be:

• A. vertical, indicating that quantity demanded does not change with price
• B. downward sloping, indicating that quantity demanded increases as price decreases
• C. upward sloping, indicating that quantity demanded increases as price increases
• D. horizontal, indicating that price does not change with quantity demanded

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of a demand curve in microeconomics. The demand curve shows the relationship between the price of a good and the quantity demanded by consumers.
2. Step 2: Recall the Law of Demand, which states that, ceteris paribus (all else equal), when the price of a good decreases, the quantity demanded increases, and vice versa.
3. Step 3: Analyze the shape of the demand curve based on the Law of Demand. Since quantity demanded changes inversely with price, the demand curve slopes downward from left to right.
4. Step 4: Evaluate the options given: a vertical demand curve means quantity demanded does not change with price (perfectly inelastic demand), an upward sloping demand curve would imply quantity demanded increases as price increases (which contradicts the Law of Demand), and a horizontal demand curve means price does not change with quantity demanded (perfectly elastic demand).
5. Step 5: Conclude that the correct generalization is that the demand curve is downward sloping, indicating that quantity demanded increases as price decreases.