A Reduction in Demand

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This change in demand can be inversed. For the same, let us begin the cost with $2.50 per bar, for which the supply of energy bars would be 15 million on a weekly basis (which is being traded). Next, resolve what follows if the demand reduces to its initial level.  There are possibilities of such cases where substitute goods come up (as people might opt for energy gel instead of bars). This reduction in demand would transfer the demand curve towards the left side. The quantity supplied would decrease, whole the new equilibrium price and equilibrium quantity would be $1.50 for 1 bar, and 10 million bars per week respectively.

 The following inference can be drawn in this context:

  1. Demand is directly proportional to both price and quantity :
  • if demand increases both price and quantity increases
  • if demand falls both price and quantity is reduced

 

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