A shift in demand curve towards the origin with given supply curve causes:
Answer & explanation
Correct answer: option 1
The correct answer is option 1: Quantity to decrease, price to fall
A shift in the demand curve towards the origin means that demand is decreasing while the supply curve remains unchanged.
- When demand decreases, at every price level, consumers are willing to buy less than before.
- This leads to a new equilibrium where both the equilibrium price falls and the equilibrium quantity decreases because sellers must lower prices to encourage more sales.