If the demand for a good service increases, how will prices affect supply?
A. Rising prices will boost supply
B. Falling prices will decrease supply
C. Rising prices will decrease supply
D. Falling prices will boost supply
This is actually Geography.
Answer: C. Rising prices will decrease supply.
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To determine how prices will affect supply when the demand for a good or service increases, we need to consider the relationship between supply and price.
In general, when the demand for a good or service increases, suppliers are motivated to increase their production to meet the higher demand and potentially generate higher profits. This is known as an upward sloping supply curve.
Therefore, the correct answer is:
A. Rising prices will boost supply.
Explanation: As prices rise, suppliers are more willing and able to increase the quantity supplied since higher prices provide an incentive for them to produce and sell more of the goods or services. The higher prices make it more profitable for suppliers to invest in expanding production capacity or adjust their production levels. Consequently, the supply curve will shift to the right, resulting in an increase in the quantity supplied at each price level.