Multiple Choice
Which of the following best explains how the forces of supply and demand affect the sale price of event tickets?
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3. The Market Forces of Supply and Demand
Supply and Demand: Quantitative Analysis
Multiple Choice
In the context of supply and demand, what is an increase in competition among sellers likely to do to the market demand for a product, assuming all other factors remain constant?
A
It will not directly affect the market demand for the product.
B
It will increase the market demand for the product.
C
It will decrease the market demand for the product.
D
It will eliminate the market demand for the product.
Verified step by step guidance1
Step 1: Understand the difference between 'market demand' and 'market supply'. Market demand refers to the total quantity of a product that all consumers are willing and able to purchase at various prices, while market supply refers to the total quantity that all sellers are willing and able to sell.
Step 2: Recognize that an increase in competition among sellers affects the supply side of the market. More sellers typically mean an increase in market supply, as more units of the product become available.
Step 3: Recall that market demand is determined by consumer preferences, income, prices of related goods, and other demand-side factors, but not directly by the number of sellers or competition among them.
Step 4: Conclude that since the question assumes all other factors remain constant, an increase in competition among sellers does not directly change the market demand curve; it primarily affects the supply curve.
Step 5: Therefore, the correct understanding is that an increase in competition among sellers will not directly affect the market demand for the product.
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