When demand increases, what typically happens to price?

When demand increases, the typical response in a market is for prices to rise, which aligns with the concepts of supply and demand in economics. An increase in demand signifies that more consumers are willing to purchase a good or service at existing prices. If the supply of the good or service does not change, this heightened demand results in greater pressure on the market, causing sellers to raise prices as they capitalize on consumers' willingness to pay more.

Higher prices serve as a signal for producers to increase supply, thus eventually bringing the market back towards equilibrium. However, in the immediate term, the relationship between demand and price is straightforward: higher demand results in higher prices. This dynamic illustrates the basic principle that, all else being equal, when demand surpasses supply, prices tend to rise until a new equilibrium is reached.