moves downwards towards the axis
moves upwards away from the axis
remains unchanged
all of the above
Answer is Right!
Answer is Wrong!
The correct answer is A.
When there is a decrease in demand, the demand curve shifts downwards towards the axis. This means that at each price, consumers are willing and able to buy less of the good.
There are a number of factors that can cause a decrease in demand, such as:
- A decrease in income: If people have less money to spend, they will generally buy less of everything, including the good in question.
- An increase in the price of substitutes: If the price of a substitute good increases, consumers will be more likely to buy the good in question instead.
- A decrease in the price of complements: If the price of a complement good decreases, consumers will be more likely to buy both the good in question and the complement good.
- A change in consumer tastes: If consumers’ preferences for the good decrease, they will be willing and able to buy less of it.
A decrease in demand will lead to a decrease in equilibrium price and quantity. This is because at the original equilibrium price, there will now be a surplus of the good. This surplus will cause the price to fall until the quantity demanded equals the quantity supplied.
I hope this explanation is helpful. Please let me know if you have any other questions.