Question : Assertion: A consumer's demand curve for normal good slopes downward.
Reason: As the price of a normal good decreases, the consumer can afford to buy more of it, leading to an increase in the quantity demanded.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Option A Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
The demand curve for a normal good slopes downward because of the income effect and the substitution effect. When the price of a normal good decreases, consumers can afford to buy more of it with their given income, leading to an increase in the quantity demanded. This is the income effect at work. Additionally, the substitution effect occurs when the price of a good decreases, making it relatively cheaper compared to other goods. This prompts consumers to switch from more expensive alternatives to the now relatively cheaper good, further increasing the quantity demanded. The combination of these effects results in a downward-sloping demand curve for normal goods.
