If the demand for a product decreases, we would expect that price will initially ________, and eventually ________.

Question

Quizplus · Accepted Answer

If the demand for a product decreases, there will be a surplus of the product, and producers will lower the price to try to incentivize more people to buy it. This, in turn, will result in a fall in the price of the product. However, over time, producers may reduce supply or even exit the market, which will cause the price to rise again. Therefore, initially, the price will fall, but eventually, it may rise again depending on supply adjustments.

If the Demand for a Product Decreases, We Would Expect