Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased production capacity
B
Increased consumer spending
C
Decreased market entry barriers
D
Decreased interest rates
Understanding the Answer
Let's break down why this is correct
Answer
When demand increases while supply decreases, there are more people wanting a product but fewer products available, which causes the market price to rise. Similarly, when consumer confidence increases, people feel more secure about their finances and are more willing to spend money. This increased willingness to spend usually leads to a rise in demand for goods and services. As demand increases due to higher consumer confidence, prices tend to rise as sellers adjust to the greater interest from buyers. For example, if more people believe they will keep their jobs, they might buy more cars, leading to higher prices for vehicles.
Detailed Explanation
When people feel confident about the economy, they tend to spend more money. Other options are incorrect because Some might think that more production means more spending; People might confuse easier market entry with consumer confidence.
Key Concepts
Market Equilibrium
Demand and Supply Dynamics
Consumer Behavior
Topic
Analyzing Market Equilibrium Changes
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.