If something causes demand to increase and something else causes supply to decrease, what will be the net effect on price?A.Price is indeterminateB.We can't tellC.Price increasesD.Price decreasesE.Price stays the same
Question
If something causes demand to increase and something else causes supply to decrease, what will be the net effect on price?A.Price is indeterminateB.We can't tellC.Price increasesD.Price decreasesE.Price stays the same
Solution
The net effect on price when demand increases and supply decreases is that the price increases. This is because the increase in demand creates a higher willingness to pay, and the decrease in supply means there are fewer goods available. This combination of factors leads to a higher equilibrium price. So, the answer is C. Price increases.
Similar Questions
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