The negative slope of the demand curve is best explained by

1. Analyze the question The question asks why the demand curve slopes downward (negative slope), meaning that as price falls, quantity demanded rises. We need the economic principle that best explains this.

2. Explain the concept The law of demand says that, other things being equal, quantity demanded rises as price falls. The classical explanation comes from utility theory:

• As a consumer buys more units of a good, the extra satisfaction (marginal utility) from each additional unit falls. This is the law of diminishing marginal utility.
• A rational consumer will only pay for an additional unit if the price matches the satisfaction it gives. Since each extra unit gives less satisfaction, the consumer will buy more only if the price is lower.
• This gives the downward-sloping demand curve.

Other supporting explanations are the income effect and the substitution effect.

3. Evaluate the options

• A. Consumer's choice: This is too general. Choice is what demand reflects, not the reason for the slope.
• B. Increasing returns to scale: This is a production concept (a firm's output rising more than proportionally as inputs increase). It relates to supply and costs, not demand.
• C. Diminishing returns to scale: This is also a production concept, so it is not relevant to consumer demand.
• D. Diminishing marginal utility: This is correct. It directly explains why consumers are willing to buy more only at lower prices.

4. Answer The correct option is D. diminishing marginal utility.

5. Exam tip Match the concept to the side of the market:

• Demand side (consumers) → utility, diminishing marginal utility, income and substitution effects
• Supply side (producers) → returns to scale, diminishing returns, costs of production

If a question about demand lists production terms like "returns to scale", you can eliminate them straight away.