Market for a product is in equilibrium. Demand for the product 'decreases'. Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.

Explanation

Decrease in demand leads to a leftwards shift in the demand curve. As a result of decrease in demand, the competition between the sellers increase and in order to sell their stock, the sellers start reducing the price of their produce. The market price is pushed down leading to an increase in quantity demanded and a fall in quantity supplied. A new equilibrium is achieved where the quantity demanded equals the quantity supplied again.