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Question
Other things being equal, as Demand increases, Equilibrium Price -
Other things being equal, as Demand increases, Equilibrium Price -
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Solution
The correct option is B increases
An increase in demand, all other things
unchanged, will cause the equilibrium price to rise; quantity supplied will increase. A decrease in demand will cause
the equilibrium price to fall; quantity supplied will decrease. 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.
An increase in demand, all other things unchanged, will cause the equilibrium price to rise; quantity supplied will increase. A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. 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.
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