HSC 2014 Q (1 Viewer)

[krypticlemonjuice]

Can someone explain why the answer to this question is D, please? I don't think i fully understand this concept

 

[carrotsss]

Less competition increases price for obvious reasons since there is less reason to reduce prices with less competitors, and quantity also obv decreases because there are just less suppliers + higher price will usually mean slightly less demand

could be wrong I don’t do eco

 

[mmmmmmmmaaaaaaa]

competition (or increase in) —> reduce price
this leaves c and d
as carrots said for quantity (to quick)

 

[gazzaboy]

The real crux of what they are trying to get you to think about is the demand and supply diagram.

Reduced competition is the same as decreased supply. This means a higher equilibrium price and a lower equilibrium quantity.