Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The equilibrium price decreases
B
The equilibrium price increases
C
There is no change in the equilibrium price
D
The equilibrium price fluctuates wildly
Understanding the Answer
Let's break down why this is correct
Answer
When demand rises while supply stays the same, buyers are willing to pay more for the same product. The demand curve shifts to the right, so the intersection point with the unchanged supply curve moves to a higher price. This means the market equilibrium price rises because sellers can charge more while still selling all the goods. For example, if the price of coffee was $3 per cup and demand increases, the new equilibrium might be $4 per cup, keeping the quantity sold the same.
Detailed Explanation
When demand rises, more buyers want the same amount of goods. Other options are incorrect because The idea that the price would fall is wrong; Thinking the price stays the same ignores the extra demand.
Key Concepts
Supply and demand
Topic
Market Equilibrium Analysis
Difficulty
easy level question
Cognitive Level
understand
Practice Similar Questions
Test your understanding with related questions
1
Question 1If the demand for loanable funds increases while the supply remains unchanged, what is likely to happen to the equilibrium interest rate?
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2
Question 2How does the law of supply interact with the price elasticity of demand to affect market equilibrium when a price increase occurs?
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3
Question 3What happens to the equilibrium price of a good when there is a decrease in demand while supply remains constant?
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4
Question 4How does an increase in the price of a good affect its market equilibrium when the demand for that good is inelastic?
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5
Question 5If an increase in the cost of production leads suppliers to offer less at every price level, how will this affect the market equilibrium price and quantity?
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6
Question 6Arrange the following steps in the correct order to illustrate the impact of a price increase on the market equilibrium for a product: A) Suppliers increase the quantity supplied, B) Price rises, C) Demand decreases, D) Market reaches a new equilibrium.
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7
Question 7If the demand for a product increases while supply remains constant, what is likely to happen to the market equilibrium price?
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