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JAMB Economics 2010 Question 13

Question 13

Theory of Consumer Behaviour

The law of diminishing marginal utility explains why

  1. A.the slope of a normal demand curve is negative
  2. B.an abnormal demand curve slopes upwards
  3. C.the slope of a normal demand curve is positive
  4. D.the consumption of inferior goods increases with income.
Show the answer and explanation

Answer: A (the slope of a normal demand curve is negative)

Explanation

As each extra unit gives less satisfaction, a consumer will buy more only at a lower price, so the demand curve slopes downwards (negative slope).