FIGURE 8-1

-Refer to Figure 8-1. In Graph B, what is the result of the market demand decreasing from D₀ to D₁?

Question

FIGURE 8-1
 
-Refer to Figure 8-1. In Graph B, what is the result of the market demand decreasing from D₀ to D₁?

Quizplus · Accepted Answer

When the market demand decreases from D₀ to D₁, the equilibrium price decreases from $5 to $4. The quantity of goods transacted in the market may also decrease, but this is not mentioned in the question. The price of the price-taking firm will also decrease to $4, as it must accept the market price.

FIGURE 8-1 -Refer to Figure 8-1. in Graph B, What Is the B