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Demand for bikes has suddenly increased, and the market price has risen from $50 to $60.

In three to five sentences, explain how this change will affect profits.

Respuesta :

derekjames367

Answer:

when a factory runs low on supplies they charge extra.So they can get there money back up to build more items.Once that they have more than enough they will reduce the price.Because they will go into over flow and may go out of business

azikennamdi

According to the Laws of Demand and Supply, an increase in demand, and an increase in prices, will create a short-term increase in profits. This is because the producing firms are rational and will also maximize their output. In the long run, however, it is likely that profit will drop or normalize especially if it is in a Perfect Economy.

Increase in Demand and Profits

As the companies increase their supply, the availability of goods reduces scarcity. And the price falls again.

The law of supply states that prices and supply always go in the same direction, all things being equal.

See the link below for more about the Law of Demand:
https://brainly.com/question/24500422

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