If Market Demand Decreases

question 102

Multiple Choice

If market demand decreases:

• A) equilibrium price and quantity will both increase.
• B) equilibrium price and quantity will both decrease.
• C) equilibrium price will increase but equilibrium quantity will decrease.
• D) equilibrium price will decrease but equilibrium quantity will increase.

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Definitions:

Labor

The human effort, both physical and mental, used to produce goods and services.

Isocost Line

A chart displaying every possible input mix that can be acquired for an identical expense.

Total Cost

All expenses a business incurs to produce goods or services, including both fixed and variable components.

Price of Capital

The cost of borrowing money to purchase capital assets or the returns expected by investors for providing capital.