If there is a low supply of a product that is in high demand, then prices are

When there is a **low supply** of a product that is in **high demand**, the **prices tend to increase**. This is a fundamental principle of supply and demand in economics: - **High Demand + Low Supply = Higher Prices** **Explanation:** 1. **High Demand:** More consumers want the product. 2. **Low Supply:** There are fewer units of the product available. 3. **Price Adjustment:** To balance the demand and supply, sellers can raise prices. Higher prices may reduce some demand, increase the incentive to supply more, or both, eventually moving the market toward equilibrium. **Real-World Example:** - **Housing Market:** In cities where many people want to live but there are limited housing options, rental and purchase prices for homes often rise. - **Seasonal Goods:** Products like umbrellas or winter coats may become more expensive during rainy or cold seasons when demand spikes. **Conclusion:** In scenarios where demand exceeds supply, prices increase as the market adjusts to balance the two forces. **Final Answer:** They increase; low supply combined with high demand causes prices to rise.