Question

If the price of a good increases, what happens to demand? If the price of a good decreases, what happens to supply? Does a change in price create curve shifts? Use Appendix C

Answer 1

We will be happy to critique your thinking on this. Think of gasoline...what happens to demand if the price goes to six dollars a gallon?

Answer 2

If price increases, demand drops. If prices drop, there will be more demand than there is supply, so supply drops.