With the shifting demand curve leftward, arrange the following statement in sequential order.
(A) At any given price, demand is less.
(B) Excess supply will be there.
(C) Some producers will decrease the prices of commodity.
(D) At new equilibrium, quantity and price will be less.
Choose the correct answer from the options given below:
With the shifting demand curve leftward, arrange the following statement in sequential order.
(A) At any given price, demand is less.
(B) Excess supply will be there.
(C) Some producers will decrease the prices of commodity.
(D) At new equilibrium, quantity and price will be less.
Choose the correct answer from the options given below:
Solution
First, excess supply emerges (B) at the original equilibrium price because the demand has decreased.
This occurs because at any given price, demand is now less (A) - which is the fundamental characteristic of a leftward demand shift.
To clear this surplus, some producers will decrease prices (C) as a market response.
Finally, the market reaches a new equilibrium where both quantity and price are lower (D) than the original equilibrium.
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