What happens to demand when the supply is low?

When supply is low, demand typically increases. This relationship is rooted in the principles of economics, particularly in the concepts of scarcity and consumer behavior.

When a product or service is limited and not readily available, consumers perceive it as more valuable or desirable. As a result, they may be willing to pay higher prices or compete fiercely to secure the limited goods. This scenario often leads to an increase in demand, as potential buyers are motivated to act quickly before resources become even scarcer.

Also, psychological factors play a role; scarcity can create a sense of urgency, prompting consumers to desire the product more intensely. This phenomenon is frequently observed in various markets, particularly with products that are in high demand but have low supply, whether due to seasonal variations, production challenges, or other external factors.

Therefore, the correct choice reflects the fundamental dynamics of supply and demand in economic theory, illustrating how consumers react to changes in supply levels.