The demand curve is negatively sloped because it is based on the principle of marginal utility and this utility decreases as consumption increases. The demand price which depends on the marginal utility of a good also declines as consumption increases, so quantity and price are inversely related, leading to the negative curve and the law of demand.
People only need so much of one thing. The lower the price the more demand you will have for the product, until the customer does not want anymore. At that time it will not matter what the price is, they will not purchase any more.
We will use the utility theory to explain consumer demand and to understand the nature of demand curves. For this purpose, we need to know the condition under which I, as a consumer, am most satisfied with my market basket of consumption goods. We say that a consumer attempts to maximize his or her utility, which means that the consumer chooses the most preferred of goods from what is available. Can we see what a rule for such an optimal decision would be? Certainly I would not expect that the last egg I am buying bring exactly the same marginal utility as the last pair of shoes I am buying, for shoes cost much more per unit than eggs. A more sensible rule would be: If good A costs twice as much as good B, then buy good A only when its marginal utility is at least twice as great as good B's marginal utility. This leads to the equimarginal principle that I should arrange my consumption so that every single good is bringing me the same marginal utility per dollar of expenditure. In such a situation, I am attaining maximum satisfaction or utility from my purchases. This is clear concept of equimarginal principle.
they can take you to court, remove your unessential furniture - like your tv and hi-fi, they could demand you be declared bankrupt, if it is a government debt or a utility debt they could even arrest you. But even if you have little money, you can offer than
The law of demand is that when you demand something you MUST say please and thank you, it's the law.
Analysis of demand is a methodology under which we analyze the influences of the determinants of demand on demand itself. It is important because the demand determines the sustainability and expansion of business
The principle of diminishing marginal utility explains the slope of the demand curve by letting us be able to see which direction the slope is in, which is always downward.
Marginal utility is the key concept underline demand .The height of a demand curve reflects marginal utility.The marginal utility curve resembles the demand curve. So, it is through the marginal utility we get the demand curve.
as we move down on the demand curve, marginal utility of a commodity starts declining bcoz of the law of diminishing marginal utility.after getting full satisfaction from a commodity both demand and marginal utility of that commodity decreases.
People only need so much of one thing. The lower the price the more demand you will have for the product, until the customer does not want anymore. At that time it will not matter what the price is, they will not purchase any more.
Well diminishing marginal utility basically states that when a person constantly consumes the same product each time they will become less and less satisfied. So diminishing utility will cause a decrease in demand.
how is a demand curve derived from individual demand curve ?
An aggregate demand curve is derived from the principle of diminishing marginal utility and it shows the amount of a good (or service) consumers would buy at different prices over some time period. Diminishing marginal utility implies that as the number of units consumed increases, the willingness to pay for additional units of that good (i.e., marginal WTP, MWTP) goes down.
We will use the utility theory to explain consumer demand and to understand the nature of demand curves. For this purpose, we need to know the condition under which I, as a consumer, am most satisfied with my market basket of consumption goods. We say that a consumer attempts to maximize his or her utility, which means that the consumer chooses the most preferred of goods from what is available. Can we see what a rule for such an optimal decision would be? Certainly I would not expect that the last egg I am buying bring exactly the same marginal utility as the last pair of shoes I am buying, for shoes cost much more per unit than eggs. A more sensible rule would be: If good A costs twice as much as good B, then buy good A only when its marginal utility is at least twice as great as good B's marginal utility. This leads to the equimarginal principle that I should arrange my consumption so that every single good is bringing me the same marginal utility per dollar of expenditure. In such a situation, I am attaining maximum satisfaction or utility from my purchases. This is clear concept of equimarginal principle.
We will use the utility theory to explain consumer demand and to understand the nature of demand curves. For this purpose, we need to know the condition under which I, as a consumer, am most satisfied with my market basket of consumption goods. We say that a consumer attempts to maximize his or her utility, which means that the consumer chooses the most preferred of goods from what is available. Can we see what a rule for such an optimal decision would be? Certainly I would not expect that the last egg I am buying bring exactly the same marginal utility as the last pair of shoes I am buying, for shoes cost much more per unit than eggs. A more sensible rule would be: If good A costs twice as much as good B, then buy good A only when its marginal utility is at least twice as great as good B's marginal utility. This leads to the equimarginal principle that I should arrange my consumption so that every single good is bringing me the same marginal utility per dollar of expenditure. In such a situation, I am attaining maximum satisfaction or utility from my purchases. This is clear concept of equimarginal principle.
both are equal and complement to each other
The demand curve is negatively sloped to represent the declining marginal utility from consumption. At greater quantities of consumption each additional unit of a good consumed will yield relatively less utility, thereby reducing the marginal willingness to pay for that good.
Diminishing marginal utility implies that, for each unit of production consumed, utility is increasing at a decreasing rate. Therefore, a consumer's greatest utility gain is always at the first unit of a good and then steadily falls to 0 as they approach infinity. A consumer's willingness to pay for a good depends on their expected utility gain, so as quantity approaches infinity, willingness-to-pay approaches 0 at a diminishing, negative rate.