If the Demand for a Good Decreased, What Would Be

question 326

Multiple Choice

If the demand for a good decreased, what would be the effect on the equilibrium price and quantity?

• A) Price would increase, and quantity would decrease.
• B) Price would decrease, and quantity would decrease.
• C) Price would increase, and quantity would increase.
• D) Price would decrease, and quantity would increase.

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Definitions:

Fixed Costs

Expenses that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Operating Profit

Income derived from normal business operations after subtracting operating expenses and cost of goods sold, also known as operating income.

Capacity

The maximum amount that something can contain or produce.

Variable Costs

Costs that change in proportion to the amount of goods produced or the volume of sales, like labor and materials.