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
Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn

Because of the complex and dynamic nature of marketing phenomenon, demand forecasting has become a regular and significant business exercise. It is necessary for profit maximisatio

For all regular goods, income elasticity is positive though the degree of elasticity fluctuates as per the nature of commodities. Consumer goods are generally categorised under thr

Please read the case study given below and answer questions given. Case Study Electron Control, Inc., sells voltage regulators to other manufacturers, who then cu

Causes There are a number of explanations of the business cycle but changes in the level of investment seem to be the most likely.  In the simplest Keynesian model an increase

limitations of managerial ecomomics

For some time, two firms have charged $0.90 per standard unit of crating materials for shipping a particular type of machine tool and each has been selling about 20,000 units per m

Question: (a) The regression results for the quantity demanded of good X is given by ln Q X = 1220 - 9.5 ln P X - 2.21 ln P Y + 1.01 ln M t values (5.3)  (-5.1

What is the goal of a firm?

“Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Explain the statement with suitable example.