1. Why does a market demand curve normally slope down?

A demand curve slopes downward because:

✔️ Law of Demand

When the price falls, people buy more; when the price rises, people buy less.

This happens due to:
	•	Substitution effect: people switch to cheaper goods.
	•	Income effect: lower prices make consumers feel richer, so they buy more.
	•	Diminishing marginal utility: the more you have of a good, the less extra satisfaction you get from each additional unit.

2. Factors that shift demand curve to the right (increase in demand)

These make people want more of a good at every price:

✔️ Increase in consumers’ income
✔️ Increase in population
✔️ Rise in the popularity of the product
✔️ Increase in the price of a substitute (e.g., Pepsi price ↑ → Coca-Cola demand ↑)
✔️ Fall in the price of a complement (e.g., coffee price ↓ → demand for sugar ↑)
✔️ Expectations of higher future prices
✔️ Seasonal changes (e.g., heaters in winter)

3. Why does a firm’s supply curve normally slope up?

The supply curve slopes upward because:

✔️ Higher prices encourage producers to supply more
Producers are willing to produce more when the price is higher because:
	•	Higher profit incentive
	•	Rising marginal cost: producing more often becomes more expensive, so firms only increase output if the price is high enough.

4. Factors that shift the supply curve to the left (decrease in supply)

These make firms supply less at every price:

✔️ Increase in production costs
(e.g., higher wages, expensive raw materials)

✔️ Natural disasters / bad weather
✔️ Higher taxes
✔️ Stricter regulations
✔️ Decrease in the number of producers
✔️ Supply chain problems
✔️ Expectations of future lower prices