Changes in market demand can really affect how much it costs to make things and how much money a business makes.

1. Increased Demand:

   • When more people want a product, prices usually go up.
   • This means the average money a business makes goes up too. We can think of total revenue (how much money a business earns) like this: Total Revenue = Price × Quantity.

2. Production Response:

   • Businesses might decide to produce more to meet the higher demand. This means they will have extra costs while making more products.
   • However, making a lot of products at once can sometimes lower the average cost of production.

3. Statistical Impact:

   • If demand increases by 10%, a business might see its revenue go up by as much as 20%. But this can depend on how much customers react to price changes.
   • In the short term, some costs stay the same (these are called fixed costs). This can impact how much profit a business makes.