If the demand for a product declines, what happens to the price of the product?
A) The price stays the same.
B) The price decreases.
C) The price increases.
D) The equilibrium price will be maintained.
E) The market price will be maintained.

Question

Quizplus · Accepted Answer

If the demand for a product declines, there will be an excess supply of the product in the market. To get rid of the excess supply, producers will lower the price of the product. This will continue until the market reaches a new equilibrium point where the quantity demanded is once again equal to the quantity supplied, but at a lower price. Therefore, the price of the product will decrease.

If the Demand for a Product Declines, What Happens to the Price