Question

1) Suppose a recent and widely circulated medical article has reported new benefits of cycling for exercise. Simultaneously, the price of the parts needed to make bikes falls. If the change in supply is greater than the change in demand, the price will ____________ and the quantity will ____________.
A) Rise, Rise
B) Fall, Fall
C) Rise, Fall
D) Fall, Rise

Answer 1

The cost of the bike-making components also decreases concurrently. The price will drop as well as the quantity will increase if the supply change outpaces the demand change.

What is the demand change?

A increase in demand entails a shift in customer preferences to buy a specific good or service, regardless of a change in the price. A change in consumer preferences, a change in the price is charged for a comparable product, or a change in income levels could all be the cause of the change.

What factors alter demand?

Several variables affect whether a good is in higher or lower demand. This comprises the cost of the product, how well it is received by consumers, the amount of advertising spent, consumer wealth, consumer confidence, and shifts in taste and trend.

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