Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that are both used in the jewellery industry. Which of the following describes the prices of the two materials?
A) Platinum is sold for a higher price than diamonds.
B) Platinum is sold for a higher price than gold.
C) Gold is sold for a higher price than platinum.
D) Gold is sold for a higher price than diamonds.

Question

Quizplus · Accepted Answer

The price of a good in the market is determined by both its demand and supply. In the case of platinum and gold, even if both are highly demanded in the jewelry industry, platinum often has a higher price than gold due to factors like rarity, cost of extraction, and market demand-supply dynamics.

Even When the Demand for One Good Is High, the Price