Why Is the Aggregate Demand Curve Downward Sloping

question 257

Multiple Choice

Why is the aggregate demand curve downward sloping?

• A) because the more people buy, the fewer additional purchases they need
• B) because people buy something else when the price goes up
• C) because people feel poorer and buy less when prices go up
• D) because the more people wish to consume, the lower the price is

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Definitions:

Market Conditions

Refers to the various economic and market factors influencing the buying and selling dynamics in a particular market at any given time.

Elasticity of Demand

A gauge of the responsiveness of the amount of a product consumers want to buy to shifts in its price, evidencing how changes in cost affect demand.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, offering an average percentage change between two points to minimize bias.

Elastic

A term describing the responsiveness of the quantity demanded or supplied of a product when its price changes.