When Demand Decreases and the Demand Curve Shifts to the Left

question 10

Multiple Choice

When demand decreases and the demand curve shifts to the left, equilibrium price ________ and equilibrium quantity ________.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Financial Advantage

The benefit gained from making a particular financial decision, often represented by gains in revenue or reductions in costs.

Traceable Fixed Costs

Constant expenses directly associated with a particular product line or business division.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues but before incomes and taxes are accounted for.