ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Supply slopes upward; demand slopes downward.
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The curves intersect at equilibrium.
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There are two curves on one graph.
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Supply slopes downward; demand slopes upward.
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Detailed explanation-1: -False. Demand curve slopes downward from left to right because of the law of diminishing marginal utility. According to this law, the utility/satisfaction of the consumer goes on decreasing with every additional consumption of the commodity and hence, the consumer will buy more goods only when the price decreases.
Detailed explanation-2: -In most cases, the supply curve is drawn as a slope rising upward from left to right, since product price and quantity supplied are directly related (i.e., as the price of a commodity increases in the market, the amount supplied increases).
Detailed explanation-3: -The supply curve is upward sloping to show that the suppliers increase their supply of a good when the price increases and vice versa. A market supply curve is derived by horizontally adding up the individual supply curves of a good.
Detailed explanation-4: -Supply is generally considered to slope upward: as the price rises, suppliers are willing to produce more. Demand is generally considered to slope downward: at higher prices, consumers buy less.