Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Equilibrium price increases, quantity decreases
B
Equilibrium price increases, quantity increases
C
Equilibrium price decreases, quantity decreases
D
Equilibrium price decreases, quantity increases
Understanding the Answer
Let's break down why this is correct
Answer
In a competitive market, when the demand curve shifts to the right, it means that more people want to buy a product at every price level. This increased demand puts upward pressure on the price because sellers see that they can charge more for their goods. As the price rises, producers are encouraged to supply more of the product to take advantage of higher profits. For example, if a popular video game becomes available and more gamers want it, the price of that game will increase, and stores will stock more copies to meet the demand. Ultimately, this leads to a new equilibrium where both the price and quantity of the product are higher than before.
Detailed Explanation
When demand increases, more people want to buy the product. Other options are incorrect because This answer suggests that when demand goes up, the quantity goes down; This option says that both price and quantity decrease.
Key Concepts
Law of Demand
Demand Curve
Supply Curve
Topic
Supply and Demand Interactions
Difficulty
hard level question
Cognitive Level
understand
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