Question

Does a demand curve always have a negative slope? Give three reasons to justify your answer.

Answer 1

A demand curve generally has a negative slope indicating the inverse relationship between price and quantity demanded. However, the demand curve may be upward sloping under certain circumstances.
For example:

1. Giffen goods have an upward sloping demand curve. They have positive relationship between price and quantity demanded.
2. Similarly, a prestige good also has an upward sloping quantity demanded. Prestige goods are demanded more at higher price.
3. Consumers may buy more of a commodity even at higher prices when they have fear of a shortage of that commodity in future.