Which of the following best describes the reason why price will increase when demand increases?

Choose 1 answer:
(A) Until price changes in response to a demand increase, the quantity demanded will be less than quantity supplied.
(B) At the old equilibrium price, the quantity supplied will exceed the quantity demanded, which will cause a surplus.
(c) Demand will increase in response to the increase in supply which drives down the price of the good.
(D) At the old equilibrium price, the quantity demanded will exceed the quantity supplied, which will cause a shortage.
(E) At the old equilibrium quantity, the price people are willing to pay for that quantity has decreased.

Question

Which of the following best describes the reason why price will increase when demand increases?

Choose 1 answer:
(A) Until price changes in response to a demand increase, the quantity demanded will be less than quantity supplied.
(B) At the old equilibrium price, the quantity supplied will exceed the quantity demanded, which will cause a surplus.
(c) Demand will increase in response to the increase in supply which drives down the price of the good.
(D) At the old equilibrium price, the quantity demanded will exceed the quantity supplied, which will cause a shortage.
(E) At the old equilibrium quantity, the price people are willing to pay for that quantity has decreased.

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ Understand the basic economic principle that when demand for a good increases while supply remains constant, the price of the good tends to increase. ‖ ‖ step 2 ⋮ Analyze the answer choices in the context of this principle. ‖ ‖ step 3 ⋮ Identify the answer choice that correctly explains the economic principle that when demand increases and supply remains constant, the quantity demanded at the original price is greater than the quantity supplied, leading to a shortage. ‖ ‖ step 4 ⋮ Recognize that a shortage occurs when the quantity demanded exceeds the quantity supplied at a given price, which puts upward pressure on the price until a new equilibrium is reached. ‖ ∻Answer∻ ***D*** ∻Key Concept∻ ⚹Price Adjustment due to Demand Increase⚹ ∻Explanation∻ ⚹When demand increases and supply remains constant, the quantity demanded exceeds the quantity supplied at the original equilibrium price, leading to a shortage and an increase in price.⚹◊What is the probability of selecting the correct answer by random chance alone in the multiple-choice question provided?⍭ Generate me a similar question◊

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