The consumer demand curve for a product is downsloping because marginal utility is constant when price declines.
True
False
The correct answer and explanation is :
Correct Answer: False
Explanation (300 words):
The statement “The consumer demand curve for a product is downsloping because marginal utility is constant when price declines” is false.
The demand curve slopes downward primarily due to the law of diminishing marginal utility, not because marginal utility is constant. Here’s why:
When consumers purchase more units of a good, the additional satisfaction (or marginal utility) they get from each additional unit decreases. For example, if you’re eating slices of pizza, the first slice might give you a lot of satisfaction, but by the fourth or fifth slice, that satisfaction begins to drop. This is known as the law of diminishing marginal utility.
Now, to convince consumers to buy more of a product when their additional satisfaction is falling, the price must decrease. That’s why the demand curve slopes downward—because as price decreases, consumers are willing to purchase more of the good, even though the utility they get from each extra unit is less.
If marginal utility were truly constant, consumers would gain the same level of satisfaction from every unit of the product, no matter how much they consumed. In such a case, there would be no reason for price to drop to encourage additional purchases, and the demand curve might be horizontal or even vertical, depending on the product. That’s clearly not how most consumer goods work in real-world markets.
Therefore, the downward slope of the demand curve is a result of declining marginal utility, not constant marginal utility. It reflects consumers’ need for a lower price to continue buying more of a product as the utility of each additional unit falls.