why do prices increase when demand for a product is high? companies know they can make more money by selling…
why do prices increase when demand for a product is high? companies know they can make more money by selling fewer products at higher prices. companies know that people will be willing to spend more to get an in - demand product. companies take advantage of the demand to make people spend more money on excess products. companies know they can stop production and still make money on sales.
Answer
Brief Explanations:
In economics, when demand for a product is high, companies know consumers are willing to pay more to obtain it. This allows companies to charge higher prices. The first option focuses on quantity - price trade - off for profit but not directly on consumer willingness. The third option about "excess products" is incorrect as high - demand situations usually don't involve excess supply. The fourth option about stopping production is not the main reason for price increase when demand is high.
Answer:
Companies know that people will be willing to spend more to get an in - demand product.