Arrange a statement of market equilibrium when the demand curve shifts leftward:
(A). The shift indicates that at any price the quantity demanded is less than before.
(B). Some firms will reduce the price of their commodity so that they can sell their desired quantity.
(C). Excess supply will arise.
(D). At the new equilibrium, quantity and price will be less than before.
Choose the correct answer from the options given below:
Arrange a statement of market equilibrium when the demand curve shifts leftward:
(A). The shift indicates that at any price the quantity demanded is less than before.
(B). Some firms will reduce the price of their commodity so that they can sell their desired quantity.
(C). Excess supply will arise.
(D). At the new equilibrium, quantity and price will be less than before.
Choose the correct answer from the options given below:
Solution
Option 1 -> Incorrect sequence - doesn't properly order the cause-and-effect relationship of market adjustment.
Option 2 -> Correct sequence - (A) demand shift occurs, (C) excess supply arises, (B) firms reduce prices, (D) new equilibrium is reached.
Option 3 -> Incorrect sequence - begins with price reduction before establishing the initial demand shift.
Option 4 -> Incorrect sequence - starts with excess supply without first explaining the cause (demand shift).
Hence, Option 2: (A), (C), (B), (D) -> This represents the logical chain of events: First, the leftward demand shift means lower quantity demanded at each price level (A). This immediately creates excess supply at the original price (C). To eliminate this surplus, firms compete by reducing prices (B). Finally, the market settles at a new equilibrium with both lower price and quantity (D). This sequence correctly shows cause and effect in market adjustment mechanism. -> correct
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