In a Standard Supply-And-Demand Diagram, What Happens When Demand Decreases

question 3

Multiple Choice

In a standard supply-and-demand diagram, what happens when demand decreases?

• A)Price declines and quantity demanded rises.
• B)Price rises and quantity demanded declines.
• C)Price and quantity supplied rise.
• D)Price and quantity supplied decline.
• E)Price and quantity demanded rise.

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Definitions:

Total Sales

The total revenue generated from the sale of products or services.

Monopolistically Competitive

Pertains to a market structure where numerous firms sell products or services that are similar but slightly differentiated, leading to non-price competition.

Herfindahl Index

A measure of market concentration that squares the market share of each firm in the industry, often used to indicate monopolistic or competitive tendencies.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for competition based on quality, price, and marketing.