Businesses generally try to provide just enough supply of goods and services to meet the demand for them. If too high a price is set, businesses won’t be able to sell their entire supply. On the other hand, setting too low a price leaves businesses without enough supply to meet demand.

If the demand for automobiles increases, but the supply does not change, what will most likely happen to the price and the quantity exchanged?

The price and the quantity exchanged will increase.


An increase in demand means that more automobiles will be purchased at any given price. So the number of automobiles exchanged will increase. Also, since demand exceeds supply, sellers will be able to set higher prices for their automobiles—at least until excess demand has been met.

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