Suppose recent and widely circulated medical article reports new benefits of cycling exercise.Simultaneously,the price of the parts needed to make bikes falls.If the change in supply is greater than the change in demand,the price will _________ and the quantity will _________.

Question

Quizplus · Accepted Answer

If the price of the parts needed to make bikes falls, it means that the cost of producing bikes decreases, and therefore the supply of bikes will increase. This increase in supply will cause a fall in price. On the other hand, the recent medical article reporting new benefits of cycling exercise might increase the demand for bikes, as people might be more willing to cycle to enjoy these health benefits. However, if the change in supply is greater than the change in demand, it means that the increase in supply will offset the increase in demand, causing a rise in quantity but a fall in price, as explained before. Therefore, the correct answer is C - Fall, rise.

Suppose Recent and Widely Circulated Medical Article Reports New Benefits