Question

As fewer people buy bicycles​, the demand for bicycle helmets will decrease and the price of a helmet will increase. The rise in the price of a bicycle helmet will increase the supply of bicycle helmets​."

This statement is________ because________

a. false; a decrease in demand for bicycle helmets does not increase the price of a bicycle helmet and an increase in the price of a bicycle helmet does not increase the supply of bicycle helmets.
b. true; when the demand for bicycle helmets increases, the supply of bicycle helmets increases so that the price of a bicycle helmet does not increase.
c. true; the increase in the price of a bicycle helmet increases the supply of bicycle helmets to eliminate the shortage.
d. false; the decrease in the demand for bicycle helmets creates a surplus and to eliminate the surplus, supply increases.
e. true; when the demand for bicycle helmets increases, the supply of bicycle helmets increases too so that no surplus occurs.

Answer 1

The correct answer is letter "A": false; a decrease in demand for bicycle helmets does not increase the price of a bicycle helmet and an increase in the price of a bicycle helmet does not increase the supply of bicycle helmets.

Step-by-step explanation:

In economics demand and supply represents a basic concept to understand fluctuations of price and consumer and producer variations. When prices rise, demand raises and supply decreases. When prices drop, demand drops and supply increases. Demand has a direct relationship with the changes in price while supply has an inverse relationship with price.

Thus, if the demand for bicycle helmets decrease, the price of helmets will decrease. If there is an increase in the price of bicycle helmets there will be a decrease in the supply of bicycle helmets. The statement proposed in the case is false.