The demand curve for a normal good is downward sloping because:

• A. as the price increases, the good becomes a necessity for all consumers
• B. as the price increases, consumers' income increases
• C. as the price decreases, producers supply more of the good
• D. as the price decreases, consumers are willing and able to buy more due to the substitution and income effects

Answer: (D)

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 for a normal good, the demand curve slopes downward, meaning that as price decreases, quantity demanded increases.
3. Recognize that this downward slope is explained by two key effects: the substitution effect and the income effect.
4. The substitution effect occurs because when the price of a good falls, it becomes relatively cheaper compared to other goods, so consumers substitute it for more expensive alternatives.
5. The income effect happens because a lower price effectively increases consumers' real income, allowing them to buy more of the good, reinforcing the increase in quantity demanded.