Step-by-step explanation:
When all the other factors such as technological development, supply quantity, etc. do not change, price would increase when there is higher demand for a product.
This is because at that time, the supply quantity is fixed (limited), the demand increases would raise the scarcity of the products - leading to the appreciation in its price.
This can also be explained by the model attached:
- First, the market is at the equilibrium at point A when the supply = demand = Q1, price = P1
- When all other factors do not changes but the demand increases, the demand curve would shift to the right.
- The intersection B of new demand curve and supply curve is the new equilibrium: price = P2 > P1