Learning Path
Question & Answer
Choose the Best Answer
A decrease in the price of coffee leading to an increase in coffee consumption.
A rise in the cost of raw materials causing manufacturers to reduce the quantity of goods supplied.
An increase in consumer income resulting in higher demand for luxury cars while manufacturers are unable to increase production.
An increase in the number of coffee shops leading to more people buying coffee, despite stable coffee prices.
Understanding the Answer
Let's break down why this is correct
When people earn more, they want more luxury cars. Other options are incorrect because This example only shows a price drop leading to more coffee use; Here only supply changes because raw material cost goes up.
Key Concepts
Demand and Supply Basics
medium 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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