in the simple economics of a competitive market price increases under which condition:
a) demand is constant. supply declines
b) demand decreases. supply increases
c) demand and supply rise concomitantly
d) demand and supply decline concomitantly
Thank you for using the Jiskha Homework Help forum. A = there are just as many people wanting the product but less of the product.
The correct answer is a) demand is constant, supply declines.
In a competitive market, the price of a product or service is determined by the interaction of supply and demand. When demand is constant or remains the same, and the supply declines, it creates a situation where there is a decrease in the availability of a product or service, while the demand for it remains constant. This leads to a scarcity of the product or service in the market.
Scarcity, in turn, creates competition among consumers willing to pay a higher price to obtain the limited available supply. As a result, sellers are able to charge a higher price in response to the decreased supply and constant demand. So in this scenario, the price increases.
To arrive at this answer, we analyze the relationship between supply and demand. Understanding the basics of supply and demand helps us determine the impact of changes in these factors on prices.