Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Price will rise, quantity may increase or decrease
B
Price will fall, quantity will increase
C
Price will remain unchanged, quantity will increase
D
Price will rise, quantity will remain unchanged
Understanding the Answer
Let's break down why this is correct
Answer
When demand increases while supply decreases, the balance in the market changes significantly. Higher demand means more people want to buy a product, making it more valuable. At the same time, lower supply means fewer products are available for sale, which can create a shortage. As a result, prices are likely to rise because sellers can charge more when many buyers compete for limited items. For example, if a new video game is released and everyone wants it, but there are fewer copies available, the price of the game will likely go up.
Detailed Explanation
When more people want a product but there are fewer available, prices go up. Other options are incorrect because This answer suggests that more demand leads to lower prices, which is not true; This option assumes that prices won't change even with higher demand and lower supply.
Key Concepts
Market Equilibrium
Demand and Supply Shifts
Price Elasticity
Topic
Analyzing Market Equilibrium Changes
Difficulty
hard level question
Cognitive Level
understand
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