Question

A decrease in quantity and price is consistent with a: Multiple Choice leftward shift in demand keeping supply constant. rightward shift in supply and demand leftward shift in supply keeping demand constant. rightward shift in demand and a leftward shift in supply.

Answer 1

Answer:

leftward shift in demand keeping supply constant

Explanation:

Demand curve is graphical curve representing quantity demanded at various prices, downward sloping based on law of demand (price demand inverse relationship).

• Change in quantity demanded is due to change in price factor of demand. It leads to movement on the demand curve itself.
• Change in demand is due to change in factors other than price. It leads to shift of the demand curve.

Markets are at equilibrium where Market Demand & Market Supply intersect. A decrease in quantity & price is consistent with : Decrease in demand, due to factor other than price. It would lead to leftwards shift in demand curve. This would create excess supply of goods, supply remaining same. Excess supply would create competition among sellers, reduce the new equilibrium price.