Ok so in my textbook, it is given that the downward slope of the demand-price curve is justified by three factors:
Law of Diminishing Marginal Utility
Income Effect(Real income)
- Substitution effect
Then after all this it goes on to state, that :
price effect=income effect+substitution effect
Doesn't Law of Diminishing Marginal Utility, affect price too? By keeping a low price on a slice of pizza, the marginal utility that is gained by people with each additional slice would be more likely to be equal or more than the price per slice, and hence demand will increase. So why isnt it included?