A decrease in demand with the supply held constant leads to:
A) an increased equilibrium price and an increased equilibrium quantity.
B) a decreased equilibrium price and a decreased equilibrium quantity.
C) a decreased equilibrium price and an increased equilibrium quantity.
D) an increased equilibrium price and a decreased equilibrium quantity.

Question

A decrease in demand with the supply held constant leads to:
A) ​an increased equilibrium price and an increased equilibrium quantity.
B) ​a decreased equilibrium price and a decreased equilibrium quantity.
C) ​a decreased equilibrium price and an increased equilibrium quantity.
D) ​an increased equilibrium price and a decreased equilibrium quantity.

Quizplus · Accepted Answer

According to the law of demand, a decrease in demand leads to a decrease in equilibrium price and quantity. This is because at the original price consumers are now willing to purchase less of the good, causing a surplus of the good to exist. To get rid of the surplus, sellers must lower the price until the market reaches a new equilibrium with a lower price and lower quantity sold.

A Decrease in Demand with the Supply Held Constant Leads