'When consumer demand for an item increases, prices rise.' This principle applies to

Question

Quizplus · Accepted Answer

This is the fundamental principle of the laws of supply and demand in economics. When the demand for a product increases, the supply may not be able to keep up, leading to higher prices. Conversely, when demand decreases, prices may falter. This principle applies regardless of the economic system in place, including capitalist and socialist forms. Mechanisation and division of labour may impact the supply of goods, but they do not directly affect prices.

'When Consumer Demand for an Item Increases, Prices Rise