If the demand curve shifts down and to the left in an increasing cost market, then:
A)the long run price stays the same and the long run quantity increases.
B)the long run price decreases and the long run quantity stays the same.
C)the long run price and quantity increase.
D)the long run price and quantity decrease.

Question

Quizplus · Accepted Answer

In an increasing cost market, as demand shifts down and to the left, it means that consumers are willing to purchase less at every price level due to factors such as a decrease in income, changes in consumer preferences or the appearance of substitute goods. This leads to a decrease in both the long run price and quantity in the market. As costs increase, producers are not able to provide the same quantity of goods at the same price as before, hence the decrease in quantity. Therefore, Option D is the correct answer.

If the Demand Curve Shifts Down and to the Left