Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Equilibrium price rises, equilibrium quantity rises
B
Equilibrium price rises, equilibrium quantity falls
C
Equilibrium price falls, equilibrium quantity rises
D
Equilibrium price falls, equilibrium quantity falls
Understanding the Answer
Let's break down why this is correct
Answer
When there is an increase in demand for a product, it means more people want to buy it at any given price. At the same time, if there is a decrease in supply, it means there are fewer products available for sale. These two changes create a situation where more people want the product, but there are less of it to go around. As a result, the equilibrium price, which is the price at which supply and demand meet, will likely rise because sellers can charge more when demand is high and supply is low. For example, if a new video game becomes very popular but fewer copies are produced, the price of the game will increase due to high demand and low supply.
Detailed Explanation
When demand goes up, people want more of the product. Other options are incorrect because This option suggests both price and quantity rise; This option says price falls and quantity rises.
Key Concepts
Shifts in Demand
Shifts in Supply
Topic
Supply and Demand Interactions
Difficulty
medium level question
Cognitive Level
understand
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