The forces underlying supply and demand interact to determine the market price.
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The persons involving in the activities of trading comprises the market system. It includes sellers, buyers and others involved in trading process. They also includes the buyers, consumers, producers who are the major players of the market system who determines the economic activity in it.
The supply and demand law is the major determinant of the production of goods and services in a market economy. The natural resources, land, capital and labor are the supplies. The purchasing power of the government, consumers and business are the demands. The forces underlying supply and demand interact to determine the market price.
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Answer: Indeterminate; Increases
Explanation:
We know that sensors are used as an input in the production of digital cameras. So, if the price of sensors falls, as a result cost of production of digital cameras also falls. This will increase the supply of cameras and shift the supply curve rightwards.
At the same time successful ad campaign will make the digital cameras more fashionable and increases the demand for digital cameras. This will also shift the demand curve rightwards.
Hence, there is an increase in the equilibrium quantity but effect on equilibrium price is indeterminate because it will be depend upon the magnitude of the shift of demand and supply curve.
The correct answer to this question is that:
In a monopoly, “the monopolist
must lower the price on all units to sell one more unit of output”.
This means that in a monopoly market,
if we increase the amount of output without lowering the price, the marginal
revenue decreases. Therefore marginal revenue is indirectly proportional to
number of outputs.
In a perfect competition however, the
marginal revenue is constant to any amount of output.
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