If demand for bread increases at every price, the equilibrium price of bread will 1 fall....

If demand for bread increases at every price, the equilibrium price of bread will

1

fall.

2

rise.

3	remain unchanged.

4	depend on income.

Expert Solution

Since the law of demand stats that there is an opposite relationship between price and quantity demanded and other factors which affect the demand remains same. The demand curve shows an inverse relationship between price and quantity demand.

The demand determinant are; its own price, price of substitute goods, price of complementary goods, income of the consumer and taste and preferences of the consumers.

In case of change in the quantity demand, there will be movement along the demand curve and in case of change in the demand, there will be shift of the demand curve.

So when the demand for bread increases at each price, then demand curve shift rightward from D to D1. Hence equilibrium price increases and quantity also increases.

Hence it can be said that if demand for bread increases at every price, the equilibrium price of bread will rise.

Hence option 2 is the correct answer.

Rahul Sunny answered 2 years ago

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