When supply increases and demand decreases, which of the following happens to the price of a good?
(1 point)
• it increases
• it stays the same
• it decreases
• it is unaffected
The price of a good decreases.
When supply increases and demand decreases, the price of a good generally decreases.
When supply increases and demand decreases, the price of a good typically decreases. To understand why, let's break it down:
1. Supply: Supply refers to the amount of a particular product or service that is available in the market. When supply increases, it means that more of the product is being produced or made available.
2. Demand: Demand refers to the desire or willingness of consumers to buy a product or service. When demand decreases, it means that consumers are less interested in purchasing the product.
Now, when supply increases and demand decreases, there is an imbalance in the market. There is a larger quantity of the product available (due to increased supply) than there are buyers interested in purchasing it (due to decreased demand). To incentivize buyers and sell the excess supply, sellers will often lower the price of the good. This lower price point makes the product more attractive to potential buyers and helps to stimulate demand.
Therefore, the correct answer is: it decreases.