Multiple choice

According to Alfred Marshal, Demand Curve slopes downward due to operation of

  1. income effect

  2. substitution effect

  3. law of diminishing marginal utility

  4. arrival of new consumer
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to Marshal, people will buy more quantity at lower price because they get lesser satisfaction from use of additional units of goods. So, a rationale consumer will not pay more for less satisfaction. He is induced to buy additional units in order to maximize his satisfaction. The diminishing marginal utility and equalizing it with the price is the cause for the downward sloping curve.

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