Which of the following explains why demand curves slope downward?

Question

Possible Answers:
-resources and technology
-substitutes and complements
-substitution effect and income effect
-prices and income

Answer 1

Demand is a relationship between a certain good and its price. To derive it, income and the prices of other goods must be fixed. Therefore, income has nothing to do with the fact that demand curves slope downward. If the income changes, the demand curve will shift.
Demand curves slope downward because as the price of a certain good rises, its consumed quantity falls. Of course, the final effect of a price change over quantity can be split into two effects, the substitution and the income effect and in the downward sloping demand curve, the substitution effect prevails; the income effect is a consequence of the price change (if oranges are part of your consumption bundle and the prices of oranges fall, you have more money).
Theoretically speaking, there is a possibility of a positively sloped demand curve; if the income effect overcomes the substitution effect. Such a good is called a Giffen good. However, it is an extreme case.
Therefore, answering your question, I would say substitution effect and income effect explain the slope of the demand curve.

Answer 2

Resources are in limited supply and technology keeps changing products and markets. As people wait for the price to go down, in order to conserve their cash resources, the changes in technology may drive the demand for the original item down. This appears to be a consistent trend.

In fact, when accounting for equipment value as well as products, a company must take care to observe both factors: demand and technology as a potential impairment and writedown of the value of their property. A company must be careful how much of a trendy product it stocks, because the bottom of the market could fall out and they could be stuck with a truckload of the item. Likewise with software and computers, they may be obsolete within a short period due to revamping of the system format or some other technical changeover. The company must carefully reserve for market demand and obsolescence, and be very reasonable about cash availability.

This is an example of how economics plays into the business scenario.

Prices and income seem to have the opposite effect, where as substitutes and complements may have varied impact on demand. If price and income keep pace with one another, the demand curve could stay flat.

Answer 3

Prices and income

most consumers have limited income to restrict their demand for a good, also at a cirtain price consumers will begin to not have demand for a good. other explanations include: decreased utility, diminishing marginal returns

Answer 4

-prices and income