DOWNWARD SLOPING IN A DEMAND CURVE

There are three reasons why the demand curve is downward sloping , it is reason for the LAW OF DEMAND .

1. Substitution effect: changes in price, motivate consumers to buy relatively cheaper substitutes goods. For example: if the price of a product goes down, people will opt for that product instead of the expensive product.
2. Income effect: changes in price affect the purchasing power of consumers's income. For example: if you go to a store and find out the product is on sale for 10 rupees, then you will buy more of the product.
3. The law of diminishing marginal(addition) utility: As you continue to consume a given product, you will eventually get less addiction utility (satisfaction) from each unit you consume. For example: As you continue to use a product for a long period of time ,eventually you get less satisfaction from consuming that product.