Question

If we observe the price of a good or service rising then the most likely cause is increase in demand or a temporary surplus?

Answer 1

The most likely cause is increase in demand because if more people want a good, companies are able to make the good more expensive.

Answer 2

Usually (rises) because of general economic growth. if there is a high demand for the goods then the price will most likely rise in order for consumers to buy a limited amount. its also a sort of scheme to increase the full potential of price. prices for a good would probably not rise if the producer/provider has an exceptional amount of stock. from price changes you can determine the demand. high price is high demand and less stock. low price is low demand and likely a surplus therefore the low price is to remove the surplus more easily (low demand)