Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An increase in demand typically leads to a higher equilibrium price.
B
If supply increases while demand remains constant, prices will rise.
C
A decrease in consumer income generally decreases the demand for normal goods.
D
The presence of substitute goods can lead to a decrease in demand for a product.
E
A higher price always results in a higher quantity supplied.
Understanding the Answer
Let's break down why this is correct
Answer
In a market, demand and supply interact to determine the price and quantity of goods. When demand for a product increases, consumers are willing to buy more at higher prices, which can lead to an increase in the product's price. On the other hand, if supply increases, meaning sellers are willing to sell more at lower prices, the price may decrease. For example, if a new smartphone is released and many people want to buy it, the demand goes up, and the price may rise. However, if a company produces too many smartphones, the supply may exceed demand, causing prices to drop.
Detailed Explanation
Other options are incorrect because Some might think that more demand always means higher prices; People may believe that more supply always raises prices.
Key Concepts
Demand and Supply Interactions
Market Equilibrium
Elasticity of Demand
Topic
Understanding Demand and Supply
Difficulty
easy level question
Cognitive Level
understand
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