Learning Path
Question & Answer
Choose the Best Answer
Supply decreases, leading to a higher equilibrium price and quantity.
Supply increases, leading to a lower equilibrium price and quantity.
Supply remains constant, causing no change in equilibrium.
Supply increases, leading to a higher equilibrium price despite a decrease in quantity demanded.
Understanding the Answer
Let's break down why this is correct
When the price of a good rises, sellers want to produce more. Other options are incorrect because Some think that a higher price makes sellers supply more, which would lower the price again; The idea that supply stays the same when price rises ignores the law of supply.
Key Concepts
Demand and Supply Basics
hard level question
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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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