ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is only one producer making the good.
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Businesses secretly agree to share their profits.
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Competition between businesses is prohibited.
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Several producers compete to sell goods to the public.
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Detailed explanation-1: -Which situation is most likely to lead to the lowest prices? There is only one producer making the good.
Detailed explanation-2: -Which of the following is most likely to occur when a competitive market adjusts from one equilibrium to another? An increase in demand will cause the equilibrium price, equilibrium quantity, and producer surplus to increase.
Detailed explanation-3: -Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.
Detailed explanation-4: -If the prevailing market price is above the equilibrium price, then there occurs the situation of excess supply.
Detailed explanation-5: -The relationship between the supply and demand for a good (or service) and changes in price is called elasticity. Goods that are inelastic are relatively insensitive to changes in price, whereas elastic goods are very responsive to price.