Question

Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?

Answer 1

Answer:

The equilibrium quantity will decline. The equilibrium price depends upon the extent of change in demand and supply.

Explanation:

When consumer items go out of style their demand decrease. This causes the demand curve to shift leftwards. At the same time, the production of such items s stopped. This further causes the supply to decrease. The supply curve, as a result, shifts leftwards.

This leftward shift in both demand and supply curve will lead to a decline in the equilibrium quantity. The change in price depends upon the extent of change in demand and supply.