Which of the following describes the adjustment process after a decrease in demand? A) The quantity supplied exceeds the quantity demanded causing prices to increase. B) The quanti... Which of the following describes the adjustment process after a decrease in demand? A) The quantity supplied exceeds the quantity demanded causing prices to increase. B) The quantity demanded and supplied remain equal until prices stabilize. C) The quantity demanded exceeds the quantity supplied causing prices to decrease. D) The quantity supplied remains the same while demand decreases.
Understand the Problem
The question is asking about the effects on supply and demand dynamics after a decrease in demand. It seeks to identify which scenario accurately describes the adjustments that occur in the market following such a decrease.
Answer
The quantity supplied remains the same while demand decreases.
The correct description of the adjustment process after a decrease in demand is: The quantity supplied remains the same while demand decreases.
Answer for screen readers
The correct description of the adjustment process after a decrease in demand is: The quantity supplied remains the same while demand decreases.
More Information
When there is a decrease in demand, the initial effect is that the quantity supplied remains unchanged while the quantity demanded falls, resulting in a surplus. Over time, suppliers may adjust by reducing prices or production to restore equilibrium.
Tips
A common mistake is confusing supply adjustments with immediate demand responses. Remember that supply can take time to adjust to changes in demand.
Sources
- Supply and Demand: Why Markets Tick - imf.org
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