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Question & Answer
Choose the Best Answer
An increase in supply typically leads to a decrease in equilibrium price.
Higher demand causes the supply curve to shift to the right.
The law of demand indicates that as prices increase, quantity demanded decreases.
An increase in demand generally results in a higher equilibrium price.
An increase in supply will always lead to an increase in quantity demanded.
Understanding the Answer
Let's break down why this is correct
When supply rises, sellers have more goods, so the price falls. Other options are incorrect because The mistake is thinking demand moves the supply curve; The error is believing supply always boosts quantity demanded.
Key Concepts
Demand and Supply Basics
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Deep Dive: Demand and Supply Basics
Master the fundamentals
Definition
Demand and supply basics cover the fundamental concepts related to the quantities of a product that consumers are willing and able to purchase (demand) and the quantities that suppliers are willing to offer (supply) at different price levels. The law of demand and supply explains the inverse relationship between price and quantity demanded or supplied, leading to the formation of demand and supply curves.
Topic Definition
Demand and supply basics cover the fundamental concepts related to the quantities of a product that consumers are willing and able to purchase (demand) and the quantities that suppliers are willing to offer (supply) at different price levels. The law of demand and supply explains the inverse relationship between price and quantity demanded or supplied, leading to the formation of demand and supply curves.
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