Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increase in demand leading to higher prices and a shortage
B
Decrease in demand leading to lower prices and surplus
C
No change in demand leading to stable prices
D
Increase in supply leading to lower prices and surplus
Understanding the Answer
Let's break down why this is correct
Answer
When consumer preferences shift towards a product, it means more people want to buy that product. This increased demand can push the market equilibrium price up because sellers see that more buyers are interested. For example, if suddenly everyone wants to buy electric cars, the price of electric cars may rise as manufacturers try to keep up with the demand. If the supply of electric cars doesn't increase quickly enough to meet this new demand, a market shortage can occur, where there aren't enough cars for all the interested buyers. This situation shows how changes in consumer preferences can directly affect prices and availability in the market.
Detailed Explanation
When more people want a product, demand goes up. Other options are incorrect because This option suggests that less demand leads to lower prices and extra products; This choice says nothing changes, but if preferences shift, demand changes too.
Key Concepts
market equilibrium
consumer preferences
market shortage
Topic
Analyzing Market Equilibrium Changes
Difficulty
hard level question
Cognitive Level
understand
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