If the demand for a good or service increases, how will prices affect supply?
(1 point)
Rising prices will boost supply.
Falling prices will decrease supply.
Rising prices will decrease supply.
Falling prices will boost suppl
Rising prices will boost supply
If the demand for a good or service increases, it is likely to lead to rising prices. In turn, rising prices will have an effect on the supply of that good or service. The correct answer is: Rising prices will boost supply. When prices increase, suppliers are motivated to increase the quantity of the good or service they are willing to produce and sell in order to take advantage of higher profits. Therefore, rising prices will generally result in an increase in supply.
To understand how prices affect supply when the demand for a good or service increases, we need to consider the relationship between price and quantity supplied. This relationship is known as the Law of Supply.
According to the Law of Supply, an increase in the price of a good or service will generally lead to an increase in the quantity supplied, while a decrease in price will generally result in a decrease in the quantity supplied. This means that there is a positive relationship between price and supply.
Therefore, if the demand for a good or service increases, the price will typically rise. As a result, suppliers will have an incentive to produce more of the good or service, leading to an increase in supply.
So, the correct answer is: Rising prices will boost supply.