In a competitive market, what happens to the price of a good when demand increas

₹0.0

Question: In a competitive market, what happens to the price of a good when demand increases?

Options:

Correct Answer: Price increases

Solution:

When demand increases in a competitive market, the price of the good typically increases due to higher competition for the limited supply.

In a competitive market, what happens to the price of a good when demand increases?

In a competitive market, what happens to the price of a good when demand increases?

Step 1: Understand that a competitive market has many buyers and sellers.
Step 2: Recognize that demand means how much of a good people want to buy.
Step 3: When more people want to buy a good, we say that demand has increased.
Step 4: With more people wanting the good, there is more competition among buyers.
Step 5: Because there is limited supply of the good, sellers can raise the price.
Step 6: As a result, the price of the good typically increases.

Supply and Demand – Understanding how changes in demand affect prices in a competitive market.
Market Equilibrium – The interaction between supply and demand that determines the market price.