When demand decreases,
A) price falls and quantity supplied decreases.
B) supply decreases so that price remains the same.
C) price rises and quantity supplied decreases.
D) price rises with no change in supply.
E) supply increases so that price remains the same.

Question

Quizplus · Accepted Answer

When demand decreases, there is excess supply in the market. Producers respond to this by lowering their prices to clear the surplus inventory. This leads to a decrease in price, as well as a decrease in the quantity supplied, as producers reduce their output in response to the lower demand.

When Demand Decreases