How does Supply and Demand work?

Question

(1 point)
Responses

As supply increases, demand increases
As supply increases, demand increases

As demand decreases, supply decreases
As demand decreases, supply decreases

As supply decreases, demand increases
As supply decreases, demand increases

Supply and demand are equal always
Supply and demand are equal always

Answer 1

The correct response is:

As supply decreases, demand increases.

This reflects the typical behavior of supply and demand in a market. When the supply of a good or service decreases, it often leads to an increase in its demand, as fewer items available can create scarcity, prompting consumers to compete for the limited quantity. Conversely, as supply increases, prices may drop if demand does not change, leading to an effect on the overall market dynamics.