What is the result of a decrease in demand for a product?

Study for the GCSE Economics Exam with comprehensive flashcards and multiple choice questions. Each question includes hints and detailed explanations. Prepare thoroughly for your exam!

A decrease in demand for a product generally results in excess supply, which creates a situation where the quantity of the product available exceeds the quantity that consumers are willing to buy at the current price. This surplus of goods leads to unsold stock for businesses, as they produce based on anticipated demand.

When demand decreases, the market responds by adjusting prices to reach a new equilibrium. In the face of excess supply, sellers may lower prices to stimulate demand and clear out their inventory. Therefore, while the emergence of unsold stock indicates the direct impact of decreased demand, it is part of a broader market mechanism that ultimately leads to price changes.

The other options reflect conditions that do not typically result from a decrease in demand. For instance, increased prices usually happen during an increase in demand, while a stable equilibrium price contradicts the natural market adjustment process. Increased consumer spending is also unlikely to occur with decreased demand, as consumers are less inclined to purchase goods when they're not valuing them as highly.

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