The correct answer is: B. (A) is true, but (R) is false
The demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded of that good. It is typically downward-sloping, meaning that as the price of a good decreases, the quantity demanded of that good increases. This is because consumers are generally willing to buy more of a good when it is cheaper.
However, there are some goods for which the demand curve may slope upward. These are known as Giffen goods. Giffen goods are goods for which the demand curve slopes upward because of the income effect. The income effect occurs when a change in the price of a good causes a change in the consumer’s purchasing power. For a Giffen good, a decrease in the price of the good will cause the consumer’s purchasing power to decrease, which will lead the consumer to buy less of the good.
In conclusion, the demand curve typically slopes downward, but it may slope upward for Giffen goods. The reason for the upward-sloping demand curve for Giffen goods is the income effect.
Here is a more detailed explanation of each option:
- A. Both (A) and (R) are true. This is incorrect because (R) is false. The demand curve does not apply only to Giffen goods.
- B. (A) is true, but (R) is false. This is the correct answer. The demand curve is typically downward-sloping, but it may slope upward for Giffen goods. The reason for the upward-sloping demand curve for Giffen goods is the income effect.
- C. (A) is false, but (R) is true. This is incorrect because (A) is true. The demand curve is typically downward-sloping.
- D. Both (A) and (R) are false. This is incorrect because (A) is true. The demand curve is typically downward-sloping.