Answer: I agree with the statement.
The demand curve shows an inverse relationship between price and quantity demanded, so it slopes downward from left to right. The reasons are:
- Law of diminishing marginal utility: As a consumer buys more units, marginal utility falls, so he buys more only at a lower price.
- Income effect: A fall in price raises the real income (purchasing power) of the consumer, so he buys more.
- Substitution effect: When the price of a good falls it becomes cheaper than its substitutes, so consumers buy more of it.
- New consumers: At a lower price, people who could not buy it earlier start buying it.
- Multiple uses: Goods like milk or electricity are put to more uses when their price falls.
