Microeconomics

[lil_killer129]

<p>I just finished my econ exam, and I have a question. It goes something like this:</p>

<p>The price of hotels in Penn State rises. More people want to go to hotels. What is the best explanation for this?</p>

<p>(A) There is an increase in supply.
(B) There is a decreases in supply.
(C) There is an increases in demand.
(D) There is a decreases in demand.
(E) The law of demand does not apply to people in hotels.</p>

<p>I can see why three of the five choices are correct; I actually have explanations for all three, however, I don't know which one is the correct one. Can someone please explain?</p>

[It_sGr82BeAGator]

<p>Well, it's gotta be C since more people want to go to hotels, thus increasing demand. The price of hotel rising does not have any effect on whether supply or demand curves shift, since hotels can't be substitutes or complements to hotels.</p>