Which of the following contribute to the downward slope of a demand curve? A

The answer to this question is:

D. A & C

A. Income and substitution effects.

Income effect

At a lower price, the shoppers get more from the similar money income and thus demand increase. A hike in the price will decrease the real income and result in a decrease in income.

Substitution effect

When the price of a commodity goes down, the customers direct their resources to the commodity. Hence, the demand for substitutes reduces.

Decreasing marginal utility of consumption

According to the law of diminishing marginal utility, as more of a good or service is consumed, additional satisfaction to the consumer diminishes, and hence clients are ready to pay less.