When a product becomes popular, we should expect

Question

BlackTom AI · Accepted Answer

An increase in demand is expected when a product becomes popular, because popularity raises the willingness of consumers to buy at each price.

1) Relevant knowledge points and concepts
- Demand curve: shows quantity demanded at each price; a rightward shift means more quantity demanded at every price (increase in demand).
- Supply curve: shows quantity supplied at each price; unchanged unless sellers’ costs or technology change.
- Market equilibrium: intersection of demand and supply; a shift in demand changes equilibrium price and quantity.
- Comparative statics: a rightward demand shift with supply fixed leads to a higher equilibrium price and larger equilibrium quantity.

2) Step-by-step reasoning
- Popularity increases consumers’ preferences and willingness to buy → demand curve shifts right (increase in demand).
- At the original price there is now excess demand (shortage), so buyers compete, pushing price up.
- As price rises, sellers supply more (movement along the unchanged supply curve), and buyers reduce quantity demanded relative to the excess but still purchase more than before at the new equilibrium.
- The new intersection of demand and supply is at a higher price and a larger traded quantity.

3) Calculations (simple numeric example)
- Suppose initial demand Qd = 100 − 2P and supply Qs = 20 + 2P.
- Initial equilibrium: 100 − 2P = 20 + 2P → 80 = 4P → P = 20. Quantity Q = 100 − 2(20) = 60.
- Popularity shifts demand right: Qd' = 120 − 2P.
- New equilibrium: 120 − 2P = 20 + 2P → 100 = 4P → P' = 25. New Q' = 120 − 2(25) = 70.
- Price rose from 20 to 25; quantity rose from 60 to 70.

4) Why the correct answer is correct
Because popularity increases demand (rightward shift) while supply stays the same in the short run, the market moves to an equilibrium with both a higher price and a larger quantity traded.

5) Why the other choices are incorrect
- b (decrease in demand): contradicts the premise of increased popularity; that would lower price and quantity.
- c (increase in supply): would lower price and increase quantity, but popularity affects demand, not supply.
- d (decrease in supply): would raise price but reduce quantity; popularity causes more demand, not less supply.

6) Conclusion
The correct choice is a: an increase in demand causing a higher equilibrium price and a larger traded quantity, which matches the provided answer.

When a product becomes popular, we should expectSingle choice

Similar Questions

If the price and quantity for a normal good, Good A, is $7 and 5 units at the original equilibrium, what is one possibility for the new equilibrium of Good A if we see income increase and all other factors stay constant?

When the price of frozen french fries increases, the equilibrium price of frozen sweet potato fries, a substitute good, will because of a shift in .

An expectation of a lower price in the future will:

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Which of the following is most likely to cause the demand curve for a product to shift to the left?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

When a product becomes popular, we should expectSingle choice

Similar Questions

If the price and quantity for a normal good, Good A, is $7 and 5 units at the original equilibrium, what is one possibility for the new equilibrium of Good A if we see income increase and all other factors stay constant?

When the price of frozen french fries increases, the equilibrium price of frozen sweet potato fries, a substitute good, will ________ because of a shift in ________.

An expectation of a lower price in the future will:

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

Which of the following is most likely to cause the demand curve for a product to shift to the left?

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

When the price of frozen french fries increases, the equilibrium price of frozen sweet potato fries, a substitute good, will because of a shift in .