Micro-economics.docx - Running Head LAW OF SUPPLY AND...

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Running Head: LAW OF SUPPLY AND DEMAND 1 Law of Supply And Demand Name Institution
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LAW OF SUPPLY AND DEMAND 2 Law of Supply And Demand Explain how changes in prices result in a downward sloping demand There are a number of reasons as to why variation in prices can result in downward sloping demand. The law of demand is founded on Diminishing Marginal utility law which according to it, the marginal utility of a commodity continues to decline when a consumer buy tends to buy more units of the respective commodity. This, therefore, implies that the consumers will be buying more units of that very commodity when their prices fall. Secondly, downward sloping demand results when fewer units are available. In this case, the utility goes higher and the making the consumer gets prepared for the commodity ( Buechner, 2018) . This is a complete proof that definitely the demand will be lower at higher prices and higher for lower prices causing a downward sloping demand. Thirdly, decrease in commodity price creates new commodity consumers. As a result, demand decreases. Conversely, an increase in the price
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