Question

A recent diet trend has made snack cakes far less popular than they once were. As such, demand for snack cakes is expected to fall. As demand falls, _____.(1 point)

consumers face higher prices, and are encouraged to consume less

producers make lower profits, and some will exit the market

consumers face lower prices, and are encouraged to consume more

producers make higher profits, and more will enter the market

Answer 1

producers make lower profits, and some will exit the market

Explanation: A demand decrease shifts the demand curve left, lowering equilibrium price and quantity. Lower sales and prices reduce producer revenues and profits, causing some firms to exit.