When the demand for a good increases,firms respond by
A) increasing their supply.
B) decreasing their costs.
C) leaving their production decisions alone.
D) increasing their quantity supplied.
E) decreasing their supply.

Question

Quizplus · Accepted Answer

When the demand for a good increases, firms respond by increasing their quantity supplied. This means that they produce and sell more of the good to meet the higher demand. This is different from increasing their supply, which would involve incurring additional costs to expand their capacity for production.

When the Demand for a Good Increases,firms Respond by