Final answer:
When demand decreases in a perfectly competitive market, the price and output level of the product decrease as firms adjust to the lower demand.
Step-by-step explanation:
In a perfectly competitive market, when demand decreases, it affects the market in several ways. The decrease in demand will result in a decrease in the price of the product. As a result, firms will decrease their level of output to match the lower demand, in order to maximize their profits.
For example, let's consider a market for smartphones where the demand decreases. As a result, the price of smartphones will decrease. This will lead smartphone manufacturers to decrease their production in order to match the lower demand and avoid excess inventory.
Overall, when demand decreases in a perfectly competitive market, the price and output level of the product decrease as firms adjust to the lower demand.