If the supply of a pair of jeans is less than what would meet customer demand, what would likely happen to the average market price of the jeans?
A.
The average market price is higher than the equilibrium point.
B.
The average market price is exactly the same as the equilibrium price.
C.
The average market price is lower than the equilibrium point.
D.
The spot price and the average market price are the same.
A. The average market price is higher than the equilibrium point.
A. The average market price is higher than the equilibrium point.
To determine what would likely happen to the average market price of jeans if the supply is less than customer demand, we need to consider the basic principles of supply and demand.
In this scenario, the supply of a pair of jeans is less than what would meet customer demand. This means there is excess demand for jeans, which often leads to a shortage in the market.
When there is a shortage, sellers have limited quantities to offer compared to the number of potential buyers. In this situation, sellers have the advantage of scarcity, and they can often increase the price of jeans to maximize their profits.
Therefore, the likely outcome is that the average market price of jeans would be higher than the equilibrium point. So, the correct answer is A: "The average market price is higher than the equilibrium point."