Choose the best answer.

Question

If supply of a product goes down, what happens to demand and price?

demand goes down, price goes up

demand goes down, price goes down

demand goes up, price goes down

demand goes up, price goes up

Answer 1

The best answer is:

demand goes up, price goes up

When the supply of a product goes down, there is less of the product available. If demand remains the same or increases (which can happen due to scarcity), the price generally rises due to the increased competition among buyers for the limited supply.