Which of the Following Statements Is Correct

question 463

Multiple Choice

Which of the following statements is correct?

• A) When demand increases, both the price and the quantity decrease.
• B) When supply decreases, both the price and the quantity decrease.
• C) When supply increases, the quantity increases and the price falls.
• D) When demand decreases, both the price and the quantity increase.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on quality, price, and marketing.

Industry

A group of companies or organizations that produce similar goods or services.

Purely Competitive

A purely competitive market is one with many sellers and buyers where no single entity has significant control over prices and where products are largely undifferentiated, leading to market equilibrium determined by supply and demand.

Total Profit

The total financial gain made by a business after subtracting all costs and expenses from total revenue.