If the demand for a good or service increases, how will prices affect supply? (1 point)
•Falling prices will boost supply.
•Falling prices will decrease supply.
• Rising prices will boost supply.
• Rising prices will decrease supply.
Rising prices will boost supply.
If the demand for a good or service increases, it typically means that more consumers are willing to purchase it. In this situation, the prices of the goods or services are likely to be affected. To understand how prices would affect supply, we can look at the basic principles of supply and demand.
When the demand for a good or service increases, it creates an incentive for producers to supply more of that good or service to the market. As a result, producers usually increase their level of production to meet the higher demand. This is known as the law of supply.
Now, let's consider how prices come into play. When prices are high, it often leads to higher profits for producers. In response to this, producers are generally motivated to increase their supply in order to take advantage of the higher prices and make more profit. Therefore, rising prices generally lead to an increase in supply.
Based on this explanation, the correct answer is:
• Rising prices will boost supply.