The following table shows the demand for, and supply of, soya milk in a particular market (the quantities are in thousands of liters per day):
$$\begin{array} { l l l }
\begin{array} { c}
\text { \$ Price } \
\text { per litre }
\end{array} & \text { Demand } & \text { Supply } \
1.80 & 160 & 142 \
1.90 & 156 & 144 \
2.00 & 152 & 146 \
2.10 & 148 & 148 \
2.20 & 144 & 150 \
2.30 & 140 & 152 \
2.40 & 136 & 154
\end{array}$$
-What is the effect on the price of an increase in demand?

Question

The following table shows the demand for, and supply of, soya milk in a particular market (the quantities are in thousands of liters per day):
 $$\begin{array} { l l l } 
\begin{array} { c} 
\text { \$ Price } \
\text { per litre }
\end{array} & \text { Demand } & \text { Supply } \
1.80 & 160 & 142 \
1.90 & 156 & 144 \
2.00 & 152 & 146 \
2.10 & 148 & 148 \
2.20 & 144 & 150 \
2.30 & 140 & 152 \
2.40 & 136 & 154
\end{array}$$
-What is the effect on the price of an increase in demand?

Quizplus · Accepted Answer

The price effect of an increase in demand will be small if the supply curve is flat, because a flat supply curve means that the quantity supplied is not very responsive to changes in price.

The Following Table Shows the Demand For, and Supply Of