The graph here shows the effect of a decrease in demand on the market for cheese.
The market for cheese

Which of the following statements about the decrease in demand shown in the graph is correct?

Choose 1 answer:
(A) The new equilibrium is $E_{1}$
(B) The new equilibrium is $P=P_{X}$ and $Q=Q_{A}$
(C) The new equilibrium is $P=P_{Y}$ and $Q=Q_{B}$
(D) The new equilibrium is $P=P_{Y}$ and $Q=Q_{A}$
(E) The new equilibrium is $E_{2}$

Question

The graph here shows the effect of a decrease in demand on the market for cheese.
The market for cheese

Which of the following statements about the decrease in demand shown in the graph is correct?

Choose 1 answer:
(A) The new equilibrium is $E_{1}$
(B) The new equilibrium is $P=P_{X}$ and $Q=Q_{A}$
(C) The new equilibrium is $P=P_{Y}$ and $Q=Q_{B}$
(D) The new equilibrium is $P=P_{Y}$ and $Q=Q_{A}$
(E) The new equilibrium is $E_{2}$

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ Identify the initial equilibrium point on the graph: The initial equilibrium point is where the original demand curve $ D1 $ intersects with the supply curve $ S1 $, which is at point $ E1 $. ‖ ‖ step 2 ⋮ Determine the new equilibrium point after the decrease in demand: The new equilibrium point is where the new demand curve $ D2 $ intersects with the supply curve $ S1 $, which is at point $ E2 $. ‖ ‖ step 3 ⋮ Match the new equilibrium point to the answer choices: Point $ E2 $ corresponds to a new price level $ P_Y $ and a new quantity level $ Q_B $. ‖ ∻Answer∻ ***C*** ∻Key Concept∻ ⚹Equilibrium Point After Decrease in Demand⚹ ∻Explanation∻ ⚹The new equilibrium point after a decrease in demand is where the new demand curve intersects with the supply curve.◊What statistical analysis can be conducted to determine the impact of the decrease in demand on the market for cheese shown in the graph?⍭ Generate me a similar question◊⚹

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