If the demand increases, what happens with the supply curve?
a. There is a movement rightward along the supply curve.
b. there is a movement leftward along the supply curve.
c. the supply decreases.
d. The supply increases.
The correct answer and explanation is :
Correct Answer:
a. There is a movement rightward along the supply curve.
Explanation:
When demand increases in a market, the immediate effect is a rise in the equilibrium price. This happens because, at the original price level, there are now more buyers competing for the same quantity of goods, which puts upward pressure on prices.
The supply curve represents the relationship between the price of a good and the quantity that producers are willing to sell. When demand increases, the price rises, and as a result, suppliers are more willing and able to produce and sell more goods to take advantage of higher profits. However, this does not shift the supply curve itself; instead, it causes a movement along the existing supply curve.
A movement along the supply curve occurs when the price of the good changes due to market forces. In this case, the increase in demand leads to a higher price, which encourages producers to supply more of the good. This results in a rightward movement along the supply curve, indicating a higher quantity supplied at a higher price.
It is important to distinguish between a movement along the supply curve and a shift of the supply curve. A shift in the supply curve happens when factors such as production costs, technology, or government policies change. However, when only demand increases (without changes in production conditions), the supply curve itself remains unchanged, and only movement along the curve occurs.
Thus, the correct answer is option (a): There is a movement rightward along the supply curve.