ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.

Detailed explanation-2: -The decrease in demand causes excess supply to develop at the initial price. a. Excess supply will cause price to fall, and as price falls producers are willing to supply less of the good, thereby decreasing output.

Detailed explanation-3: -Demand Increase: price increases, quantity increases. Demand Decrease: price decreases, quantity decreases. Supply Increase: price decreases, quantity increases.

Detailed explanation-4: -Demand is generally considered to slope downward: at higher prices, consumers buy less. The point at which the two curves intersect represents the market-clearing price-the price at which demand and supply are the same.

Detailed explanation-5: -Key Takeaways In the most general sense (and assuming ceteris paribus conditions), an increase in aggregate demand corresponds with an increase in the price level; conversely, a decrease in aggregate demand corresponds with a lower price level.