a decrease in demand for a product, holding other things constant, will
What are your choices?
will result in less people buying the product, a surplus of the product, the company reduces its price and therefore its supply....to make the supply within a closer ratio between supply:demand therefore allowing its company to sell the goods at the base price ...but the company now has to cut its payroll because they are making less off that product, it took people to make that product. less product moving off shelves means less workers to produce it. the workers get fired....this causes them not to spend as much...therefore decreasing the demand and this is the recycle affect.
A decrease in demand for a product, holding other things constant, will have several effects:
1. Lower quantity demanded: With a decrease in demand, fewer units of the product will be purchased compared to before.
2. Lower price: In order to compensate for the decrease in demand and attract buyers, sellers may lower the price of the product. This is because a lower price can stimulate demand and encourage customers to buy.
3. Decreased production: As a result of the lower demand, producers may reduce their production levels to avoid excess inventory and minimize costs.
4. Reduced profitability: With lower sales and potentially lower prices, the overall profitability of the product may be negatively affected.
To determine the effects of a decrease in demand, it's important to consider other factors that may influence the market, such as the availability of substitutes, changes in consumer preferences, shifts in income levels, and the state of the overall economy. Additionally, understanding the concept of demand elasticity can also help in predicting the magnitude of changes in quantity demanded as a result of changes in price.