As there price increases what is likely to happen to the supply of the product and what is lie to happen to the demand of the product.

Answer 1

When the price of a product increases, it is likely to have an impact on both the supply and demand of the product.

1. Supply: As the price increases, suppliers are motivated to increase their production and supply of the product. Higher prices may incentivize suppliers to invest more resources to produce and bring more of the product to the market. This can lead to an increase in the supply of the product.

2. Demand: The effect of price on demand varies depending on the type of product. For normal goods, as the price increases, the quantity demanded typically decreases. This is because consumers are less willing or able to purchase the product at higher prices. On the other hand, for certain luxury goods or products with high brand value, an increase in price may actually increase the demand, as it creates a perception of higher quality or exclusivity.

Overall, price increases tend to have a negative impact on demand, but the magnitude of the effect can vary depending on the nature of the product.