Decrease in demand - effect on equilibrium price, Managerial Economics

Decrease in Demand

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At the initial equilibrium price P1, quantity demanded falls from q1 to qd.  But the quantity supplied is still q1 at this price.  Hence, this creates excess of supply over demand, and this causes price to fall to a new equilibrium level P2 and quantity to  fall to a new equilibrium level q2.

Posted Date: 11/27/2012 6:18:35 AM | Location : United States







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