Why do prices increase when demand for a product is high? A. Companies know they can make more money by selling fewer products at higher prices.
B. Companies know that people will be willing to spend more to get an in-demand product.
C. Companies take advantage of the demand to make people spend more money on excess products.
D. Companies know they can stop production and still make money on sales.
The correct answer is B. Companies know that people will be willing to spend more to get an in-demand product.
When demand for a product is high, customers are more likely to pay higher prices because they want the product. Companies recognize this willingness to pay and adjust their prices accordingly, maximizing their profits. If demand continues to be high, raising prices can help them capture more value from the market.