Asked by Julia Lavier on Jun 29, 2024
Verified
Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that price) , then we would expect both Camille's and Julia's to
A) raise their price and reduce their quantity supplied.
B) raise their price and increase their quantity supplied.
C) lower their price and reduce their quantity supplied.
D) lower their price and increase their quantity supplied.
Competitive Market
A market structure characterized by a large number of buyers and sellers, where no single entity can influence prices significantly.
Quantity Supplied
The amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.
- Gain insight into how alterations in supply and demand shape market equilibrium.
Verified Answer
RB
Richard BurnadzJun 30, 2024
Final Answer :
B
Explanation :
In a competitive market, if sellers are running out of goods to sell at the current price due to high demand, they are likely to raise their prices to reach a new equilibrium. Raising the price would also incentivize them to increase their quantity supplied to meet the higher demand.
Learning Objectives
- Gain insight into how alterations in supply and demand shape market equilibrium.