The downward demand spiral happens when a company cannot meet competitors prices are not met as because of underutilzied capacity, higher and higher unit costs result is a greater reluctance to meet competitors' prices.

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The downward demand spiral is a concept in economics where higher unit costs lead to higher prices, which in turn leads to lower demand, causing even higher unit costs. This cycle can continue in a downward spiral if the company cannot find a way to reduce costs or increase demand. It is true that if a company cannot meet competitors' prices due to underutilized capacity or other reasons, it may result in higher unit costs and a greater reluctance to match competitors' prices, which can contribute to the downward demand spiral.

The Downward Demand Spiral Happens When a Company Cannot Meet