As demand for phone apps increases, other things being equal, we can expect
A) a decrease in both the relative price and quantity of phone apps.
B) a decrease in the supply of phone apps.
C) more phone apps to be produced.
D) an excess number of phone apps in the market.

Question

Quizplus · Accepted Answer

As demand for phone apps increases, we can expect more phone apps to be produced. This is because app developers will see the opportunity for profit and enter the market, increasing supply to meet the demand. Therefore, the quantity of phone apps is likely to increase. The relative price of phone apps may or may not change, depending on the extent to which the increase in supply can keep up with the increase in demand. However, a decrease in price is not a necessary outcome, as the increase in demand could also drive up prices if supply is unable to keep up. There is no reason to expect a decrease in supply or an excess of phone apps in the market.

As Demand for Phone Apps Increases, Other Things Being Equal