Answer to Question #319168 in Microeconomics for Tshidi

Question

Describe the course of events in a competitive market where there is a permanent decrease in demand and permanent increase in demand

Answer 1

Answer.

When there is permanent decrease in demand,the market price of the goods falls and the market quantity decreases.

On the other hand when there is Permanent increase in demand ,there would be an automatic increase in the market quantity. What follows then is that the market price rises above ATC in most and each firms.