The slope of the demand curve is negative i.e. slope is downward. There are several reasons for the slope nature downward of the demand curve:
1. The slope of the humidity marginal utility demand curve is downward to the right as the law of demand is based on the law of marginal utility. As the consumer buys an item more and more, the marginal utility of the additional unit decreases. Therefore, the consumer is ready to pay a lower price for additional units. That’s why the demand curve slows downwards.
2. Income effect – When the price of an item drops, other things remain the same, the actual income of the consumer increases. As a result, his purchasing power increases because he has to pay less for the quantity given. The increase in real income encourages the consumer to demand more goods and services.
Increase in demand due to increase in actual income is known as income impact. However, it should be noted that the income effect is negative in case of substandard objects. If the price of a decrease in a low object fall significantly, the actual income of consumers increases and they become relatively rich. As a result, they replace better items with substandard objects. As a result, the consumption of substandard objects decreases. Thus, the income impact on demand of substandard objects becomes negative..
3. Replacement effects – When a -com price- modity falls, its option prices remain stable, options become relatively expensive. Or, in other words, the object of which the price falls relatively inexpensive. Since the consumer that maximizes utility replaces cheap goods with expensive goods, demand for inexpensive goods increases. Increase in demand due to this factor is known as replacement effect.
4. Changes in the number of consumers: When the price of an item falls, it comes into the reach of families who weren’t able to buy it at a higher price earlier. A decline in price gives them a chance to change their desire to demand. Similarly, the price increase decreases the number of consumers. Since the demand of an object is in contrast to its price, the demand curve always bends from left to right downwards.
5. Various uses of the object – If an object can be put into multiple use, the change in its price will affect its demand more. For example, electricity can be used for multiple uses. If the electricity price rises, consumers will use it for limited purposes only. If by contrast, the electricity price drops, consumers will use it freely for various purposes.
6. Psychological effects – Psychologically people buy it more when the price of an object falls. So the demand curve slows downwards.