Decrease in demand - effect on equilibrium price, Managerial Economics

Decrease in Demand

1469_decrease in demand.png

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







Related Discussions:- Decrease in demand - effect on equilibrium price, Assignment Help, Ask Question on Decrease in demand - effect on equilibrium price, Get Answer, Expert's Help, Decrease in demand - effect on equilibrium price Discussions

Write discussion on Decrease in demand - effect on equilibrium price
Your posts are moderated
Related Questions
Unit Elasticity of Supply Supply is said to be of unit elasticity if changes in price bring about changes in quantity supplied in the same proportion.  Thus, when price rises,

INTERNATIONAL LIQUIDITY International liquidity is the name given to the assets which central banks use to influence the external value of their currencies.  It can also be

The gap between theory and practise and the role of managerial economics: We have noted above that application of theories to the process of business decision making contributes a

show how scarcity and opportunity cost are useful in decisionmaking

Structural Unemployment The decline of the highly localized industry due to international trade causes great problems of regional (structural) unemployment.  If it would take

Q. Analysis of team production? Harold Demsetz and Armen Alchian's analysis of team production is a clarification and amplification of earlier work by Coase. According to them,

explain in detail ramsey pricing with example?


How Income level must remain constant - law of demand The law of demand operates only when income level of the buyer remains constant. If income rises when the price of commod

Household This refers to all the people who live under one roof and who make or are subject to others making for them, joint financial decisions. The household decisions are a