Question

There is a new gadget that just came out. Many people want it, but there are not many available. After one year, the gadget is more popular, but there are more of them available. A student describes how the price of the gadget would change using the laws of supply and demand by saying, "Since the quantity supplied is initially low, the price will be high and, as the quantity supplied increases, the price would get lower." Why is the student’s answer incorrect?

-When the quantity supplied is low, the price will be low.
-When the quantity supplied increases, the price will get higher.
-The price is affected by the interaction of supply and demand.
-The price is affected by inflation, not just quantity.

Answer 1

When the quantity is low the price will be low is the answer because look at the Xbox one they have lowered the price since very little people where buying them because everyone else was buying the Playstation 4.

Answer 2

The answer is D, inflation causes a great deal on what things are priced at. its just like the iphone, just because there are many out there, doesnt mean the price should be lowered