Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: Problem 9

Suppose the price of a service falls and people buy more of that service. What has happened? (LO2) a) Quantity demanded changed. b) Demand increased. c) Demand decreased.

Short Answer

Expert verified
a) Quantity demanded changed.

Step by step solution

01

Understanding quantity demanded

Quantity demanded refers to the specific amount of a service that consumers want to buy at a given price. It represents a movement along the demand curve. When the price of a service falls, as it does in this case, people may buy more of that service, resulting in a change in quantity demanded.
02

Understanding increase in demand

An increase in demand refers to a shift in the demand curve to the right. This means that at any given price, people are now willing to buy more of the service. An increase in demand typically results from factors unrelated to price, such as changes in consumers' tastes, preferences, or income.
03

Understanding decrease in demand

A decrease in demand refers to a shift in the demand curve to the left. This means that at any given price, people are now willing to buy less of the service. As with an increase in demand, a decrease in demand is typically caused by factors unrelated to price.
04

Evaluating the given scenario

In the given scenario, the price of a service has fallen and more people are buying that service. This indicates that people are responding to the change in price, which suggests that the quantity demanded has changed. It does not imply that there has been a shift in the demand curve due to factors other than the price, so the demand has not increased or decreased.
05

Answer

Based on the analysis, the correct answer for this exercise is: a) Quantity demanded changed.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

If the price of a product rises and as a result businesses increase their production, then __________. (LO5) a) supply has increased b) supply has decreased c) quantity supplied has increased d) quantity supplied has decreased e) both supply and quantity supplied have increased

When market price is above equilibrium price, the market price will be driven __________.(LO6) a) up by unhappy buyers b) up by unhappy sellers c) down by unhappy buyers d) down by unhappy sellers

A shift in the supply curve for gasoline in the United States would result if __________. (LO5) a) people decided to travel more by automobile b) the OPEC nations decided to stop sales of crude oil to the United States c) the price of gasoline increased d) the price of gasoline decreased e) the price of mass transit increased

The market demand for a good will decrease __________(LO1,2) a) as income decreases if the good is an inferior good b) if the market price of a substitute good increases c) as income decreases if the good is a normal good d) if the market price of a complementary good decreases e) as the number of consumers in the market increases

Changes in supply may be caused by changes in __________.- \((\mathrm{LO5})\) a) the cost of factors of production b) the level of technology c) the number of suppliers d) all of the above e) none of the above
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free