In consumer theory, the combined income effect and substitution effect together account for which typical shape of the demand curve for a normal good?

Introduction / Context:
Microeconomics explains consumer behavior using the concepts of income effect and substitution effect. When the price of a good changes, these two effects influence the quantity demanded. For a normal good, their combined impact gives the familiar downward sloping demand curve. This question tests whether you can connect these theoretical effects to the graphical shape of the demand curve in standard economic models.

Given Data / Assumptions:

• The discussion is about a normal good, not an inferior or Giffen good.
• The consumer faces a change in the price of the good.
• Income effect describes how purchasing power changes when price changes, holding money income constant.
• Substitution effect describes how the consumer substitutes between goods when relative prices change.

Concept / Approach:
When the price of a normal good falls, the substitution effect makes the consumer buy more of that good because it is cheaper relative to substitutes. At the same time, the income effect for a normal good is also positive; the consumer feels effectively richer and increases consumption. Both effects move in the same direction, increasing quantity demanded when price falls. This joint action explains why the demand curve for a normal good slopes downward. The correct option must therefore link income and substitution effects to the downward sloping demand curve, not to supply or special shapes.

Step-by-Step Solution:
Step 1: Recall that for a normal good, both income effect and substitution effect reinforce each other when price falls. Step 2: Recognize that as a result, a lower price leads to a higher quantity demanded. Step 3: Recall the basic law of demand: price and quantity demanded move in opposite directions. Step 4: Connect this law with the standard graphical representation of a downward sloping demand curve. Step 5: Identify option B, which states that the income and substitution effects account for the downward sloping demand curve for a normal good.

Verification / Alternative check:
An indifference curve and budget line diagram provides an alternative verification. When price falls, the budget line pivots outward. Decomposing the movement from the original equilibrium to the new equilibrium into a substitution movement along the original indifference curve and an income movement to a higher indifference curve shows both effects. For a normal good, both components increase quantity consumed. The total change is reflected as movement along a downward sloping demand curve. This graphical reasoning confirms option B as the correct answer.

Why Other Options Are Wrong:
Option A is wrong because the upward sloping supply curve is explained by producers responding to higher prices with greater quantities supplied, not by consumer income and substitution effects. Option C is wrong because it vaguely claims both upward and downward sloping curves, which does not specify the normal good case clearly. Option D is wrong because a perfectly horizontal demand curve implies infinite price elasticity, a special case not derived solely from the usual income and substitution effects for normal goods.

Common Pitfalls:
Students sometimes mistakenly think that income and substitution effects are about supply, not demand, which leads them to choose the supply curve option. Another pitfall is to forget that the direction of the income effect can differ for inferior goods, leading to confusion about the general result. To avoid such errors, it is helpful to remember a simple rule: for a normal good, both income and substitution effects work together to produce the downward sloping demand curve, which is a central result in consumer theory.

Final Answer:
The income and substitution effects together account for the downward sloping demand curve for a normal good.