An Increase in the Demand for a Product Will Cause

question 210

Multiple Choice

An increase in the demand for a product will cause the

• A) demand for and prices of the resources used to produce the product to increase.
• B) demand for and prices of the resources used to produce the product to decrease.
• C) demand for and prices of the resources used to produce the product to remain unchanged.
• D) price of the product to decrease.

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Definitions:

Price Elasticity

An economic concept that measures how the quantity demanded of a good changes in response to a change in its price.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Elastic

A term often used in economics to describe a situation where the demand for a product or service significantly changes in response to a change in price.

Pricing Strategy

An approach businesses use to set the prices for their products or services, based on costs, market demand, competition, and other factors.