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Market Equilibrium
Question
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Show that demand of a commodity is inversely related to its price.
Explain with the help of utility analysis.

Or

Why is an indifference curve negatively sloped? Explain.

Answer

The demand of a commodity is inversely related to its price, suppose a consumer consumes a good X and its price falls. in that case, the consumer will get a greater marginal utility by consuming good X than the other goods. Thus, he will increase the consumption of good X and its demand will increase. however, in case the price rises, the consumer will get lower utility from the consumption of good X and thus, he will reduce the demand for it.

price of commodity X  demand of commodity of X
10 100
15 50
20 25
25 15

This analysis of the above schedule shows that quantity demanded of a commodity holds a negative relationship with the price.
 It shows that a higher price of quantity demanded of X falls and vice versa. as the price increases from Rs 10 to Rs 15, the quantity demanded falls from 100 units to 50 units. 

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Some More Questions From Market Equilibrium Chapter

Market for a good is in equilibrium. The demand for the good 'increases'. Explain the chain of effects of this change.

Market of a commodity is in equilibrium. Demand for the commodity "increases." Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.

Giving reasons, state whether the following statements are true or false.
A monopolist can sell any quantity he likes at a price.

Giving reasons, state whether the following statements are true or false.
When equilibrium price of a good is less than its market price, there will be competition among the sellers. 

Market for a good is in equilibrium. There is simultaneous increase both in demand and supply of the good. Explain its effect on market price.

Market for a good is in equilibrium. There is simultaneous decrease both in demand and supply of the good. Explain its effect on market price.

Market for a good is in equilibrium. There is an 'increase' in demand for this good. Explain the chain of effects of this change. Use diagram. 

What is minimum price ceiling? Explain its implications.

If the prevailing market price is above the equilibrium price, explain its chain of effects.

The demand of a commodity when measured through the expenditure approach is inelastic. A fall in its price will result in :
(choose the correct alternative)
(a) no change in expenditure on it.
(b) increase in expenditure on it.
(c) decrease in expenditure on it.
(d) any one of the above