If the demand for a good or service increases, how will prices affect supply?

Question

If the demand for a good or service increases, how will prices affect supply?

(1 point)

Rising prices will boost supply

O Falling prices will decrease supply

Rising prices will decrease supply

O Falling prices will boost supply

Answer 1

Rising prices will boost supply

Answer 2

Rising prices will boost supply.

Answer 3

Rising prices will generally increase supply. When the demand for a good or service increases, it creates an incentive for suppliers to produce and sell more of that product at a higher price, as they will be able to earn more profit. This increased profit potential encourages existing suppliers to increase their production levels and new suppliers to enter the market. As a result, the overall supply of the good or service increases. Therefore, the correct answer is: Rising prices will boost supply.