Other things being equal, a higher price induces
A) buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell.
B) buyers to increase the amount they want to buy and sellers to reduce the amount they are willing to sell.
C) buyers to reduce the amount they want to buy and sellers to reduce the amount they are willing to sell.
D) buyers to increase the amount they want to buy and sellers to increase the amount they are willing to sell.

Question

Quizplus · Accepted Answer

According to the law of demand, as the price of a good increases, the quantity demanded decreases. Buyers will therefore reduce the amount they want to buy. On the other hand, according to the law of supply, as the price of a good increases, the quantity supplied increases. Sellers will therefore increase the amount they are willing to sell. Therefore, a higher price induces buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell.

Other Things Being Equal, a Higher Price Induces