A significant increase in consumer demand leads to firms hiring more workers to expand production. How would this change impact the goods market and factor market in the short term?

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Answer

The goods market will see reduced prices due to increased production, while the factor market will experience a decrease in labour demand.

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The goods and factor markets will remain unchanged because firms only respond to consumer preferences.

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The goods market will experience higher prices due to increased demand, and the factor market will experience an increase in labour demand.

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The goods market will become oversaturated with products, leading to lower prices, and the factor market will experience a decline in labour supply.

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A significant increase in consumer demand leads to firms hiring more workers to ...

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