If the demand for a product increases, then we would expect the equilibrium price to:

• A. remain unchanged
• B. fall
• C. rise
• D. become indeterminate

Answer: (C)

Verified step by step guidance

1. Understand the concept of demand: Demand represents the quantity of a product that consumers are willing and able to purchase at various prices.
2. Recall the law of demand: Generally, as the price of a product decreases, the quantity demanded increases, and vice versa.
3. Consider what happens when demand increases: An increase in demand means that at every price level, consumers want to buy more of the product than before.
4. Analyze the effect on equilibrium: The equilibrium price is where the quantity demanded equals the quantity supplied. If demand increases while supply remains constant, there will be excess demand at the original price.
5. Predict the market response: To eliminate this excess demand, the price will rise, moving the market to a new equilibrium with a higher price and higher quantity sold.