[amp_mcq option1=”A fall in demand” option2=”An increase in supply” option3=”Improvement in production technology” option4=”An increase in demand” correct=”option1″]<\/p>\n
The correct answer is: A fall in demand.<\/p>\n
A fall in demand will cause the demand curve to shift to the left, which will lead to a lower equilibrium quantity and a higher equilibrium price.<\/p>\n
An increase in supply will cause the supply curve to shift to the right, which will lead to a higher equilibrium quantity and a lower equilibrium price.<\/p>\n
Improvement in production technology will cause the supply curve to shift to the right, which will lead to a higher equilibrium quantity and a lower equilibrium price.<\/p>\n
An increase in demand will cause the demand curve to shift to the right, which will lead to a higher equilibrium quantity and a higher equilibrium price.<\/p>\n
Here is a diagram that illustrates the effect of a fall in demand on the equilibrium price and quantity:<\/p>\n
[Diagram of a downward-sloping demand curve and an upward-sloping supply curve, with the equilibrium price and quantity initially at P1 and Q1. The demand curve then shifts to the left, to D2. The new equilibrium price is P2, and the new equilibrium quantity is Q2.]<\/p>\n
As you can see, the fall in demand causes the equilibrium price to increase from P1 to P2, and the equilibrium quantity to decrease from Q1 to Q2.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”A fall in demand” option2=”An increase in supply” option3=”Improvement in production technology” option4=”An increase in demand” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-53401","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n