ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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consumers that they should buy a greater quantity of the good.
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to producers that they should supply a greater quantity of the good.
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to consumer that they should increase their demand for the good.
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to producers that they should increase their supply of the good.
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Detailed explanation-1: -The higher the price, the higher the quantity supplied. Lower prices mean reduced supply, all else held equal. Higher prices give suppliers an incentive to supply more of the product or commodity, assuming their costs aren’t increasing as much.
Detailed explanation-2: -If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.
Detailed explanation-3: -The relationship between price and quantity supplied is a direct relationship. Economists refer to this relationship as the law of supply. When the price of a good rises, the quantity supplied of that good will increase.
Detailed explanation-4: -If prices are rising because of high demand from consumers, this is a signal to suppliers to expand production to meet the higher demand. If there is excess supply in a market, the price mechanism will help to eliminate a surplus of a good by allowing the market price to fall.
Detailed explanation-5: -High prices are signals to producers to produce more and buyers to buy less. Low prices are signals for producers to produce less and for buyers to buy more.