National Economics Challenge Practice Test

In a market where there is an increased consumer preference for a product, it is reasonable to expect that more consumers will want to buy that product. This shift in preference typically leads to an increase in demand. When demand increases, consumers are willing to purchase more at various price points, which tends to exert upward pressure on the price of the good.

As demand increases, suppliers may respond to the heightened interest by raising prices to maximize their revenue. This scenario is supported by the basic principles of supply and demand: when demand shifts to the right (indicating an increase), it often results in a higher equilibrium price as the market reaches a new balance where the number of consumers wanting the product is greater than what is initially supplied at the old price.

Thus, in a situation where consumer preference positively impacts demand, it is most logical to conclude that both price and demand would rise, making this the correct interpretation of the market dynamics at play.