Question

How does a firm generally respond to higher demand for its goods?

a.it rations goods.
b.it raises prices.
c.it cuts prices.
d.there is no set response to this situation.

Answer 1

I think it would be A

Answer 2

B. raise prices.

Step-by-step explanation:

When the demand increase, while the firm is not able to increase the production, they raise the prices, because there will be buyers willing to pay more. That is the classical equilibrium of the market, offer - demand: increases in demand push the prices upward, increasing in offer pushes the prices downward.