Which statement best describes the slope of a typical demand curve and the related economic law?

Which statement best describes the slope of a typical demand curve and the related economic law?

• A. It slopes upward due to the law of supply.
• B. It is vertical in a perfectly inelastic demand.
• C. It slopes downward; as price falls, quantity demanded rises.
• D. It is horizontal in a perfectly elastic demand.

Answer: (C)

Demand curves are typically downward-sloping because of the Law of Demand: price and quantity demanded move in opposite directions. When the price falls, buyers can afford more, and the good looks cheaper relative to alternatives, so they buy more. This is the combined effect of the income effect (goods feel cheaper, increasing real purchasing power) and the substitution effect (buyers switch from more expensive substitutes to the cheaper good). That’s why the statement describing a downward slope with quantity demanded rising as price falls best captures how real markets respond. The other scenarios describe special cases or separate ideas: an upward slope would misstate the relationship (that would align with the law of supply, not demand); a vertical demand curve is a perfectly inelastic case where quantity demanded doesn’t change with price; and a horizontal demand curve represents perfect elasticity, an extreme and not typical in real markets.

Demand curves are typically downward-sloping because of the Law of Demand: price and quantity demanded move in opposite directions. When the price falls, buyers can afford more, and the good looks cheaper relative to alternatives, so they buy more. This is the combined effect of the income effect (goods feel cheaper, increasing real purchasing power) and the substitution effect (buyers switch from more expensive substitutes to the cheaper good). That’s why the statement describing a downward slope with quantity demanded rising as price falls best captures how real markets respond. The other scenarios describe special cases or separate ideas: an upward slope would misstate the relationship (that would align with the law of supply, not demand); a vertical demand curve is a perfectly inelastic case where quantity demanded doesn’t change with price; and a horizontal demand curve represents perfect elasticity, an extreme and not typical in real markets.