If the demand for a good or service increases, how will prices affect supply?

Question

A. rising prices will decrease supply

B. rising prices will boost supply

C. falling prices will decrease supply

D. falling prices will boost supply

Answer 1

The correct answer is:

B. rising prices will boost supply

When the demand for a good or service increases, it typically leads to higher prices. As prices rise, suppliers are generally incentivized to produce and sell more of that good or service to take advantage of the higher prices, thus boosting supply.