Why do the prices increase when demand for a product

Explanation:

When all the other factors such as technological development, supply quantity, etc. do not change, price would increase when there is higher demand for a product.

This is because at that time, the supply quantity is fixed (limited), the demand increases would raise the scarcity of the products - leading to the appreciation in its price.

This can also be explained by the model attached:

- First, the market is at the equilibrium at point A when the supply = demand = Q1, price = P1

- When all other factors do not changes but the demand increases, the demand curve would shift to the right.

- The intersection B of new demand curve and supply curve is the new equilibrium: price = P2 > P1

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