Question

If the price of pants increases, what would you expect would happen in the market for pants?

Answer 1

If the price of the pants increases, it will lead to a fall in demand for the pants while the supplier will supply more at the given price. This will push the price in the downward direction, and the market will reach the equilibrium.  

Further Explanation:

Law of Demand:

According to this law  'when the price of the goods increases, quantity demanded will fall and when the price of the goods decreases, the quantity of good demanded will increase while other things remain constant. So, the price of the pants increase, the quantity demanded will decrease.

Law of Supply:

According to the Law of supply, when the price of the goods increases, the quantity supplied of the goods will increase and when the price of the goods decreases, the quantity supplied of goods will decrease. The supply curve is upward sloping since the quantity supplied and prices are directly proportional.

The increase in supply will put pressure on the price bring them down, and the market will reach the equilibrium. The demand will equal the supply at this point of price.

Therefore, the price that will prevail in the market will be equal to the price where the demand and supply are equal. And the market will be in equilibrium.

Learn more:

1. Demand and type of goods

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2. Demand and supply of goods

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3. Elasticity of demand

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Answer details:

Grade: Middle School

Subject: Economics

Chapter: Market

Keywords: price, price of pants increase, market, Law of demand, Law of supply, economics, demand, supply, goods.

Answer 2

Answer: There will be a surplus at the increased price.

Explanation: Acc. to the law of demand as the price of a good rises the quantity demanded for the good will fall. This is represented by a movement up along the demand curve.

Acc. to the law of supply as price of a good rises the sellers will supply more units of the good. This is represented by a movement up along the supply curve.

At the increased price, there will be a surplus in the market given by Q's - Q'd.

Eventually, the surplus will lead to a fall in the price of pants till demand for the good is equal to its supply.