As supply increases, prices should decrease, if demand increases, prices should increase and vice versa.

As supply increases, prices should decrease, if demand increases, prices should increase and vice versa.

• A. The concept of supply and demand
• B. Price Competition
• C. Free Enterprise Economy
• D. Profit

Answer: (A)

This question is about how supply and demand determine prices in a market. When supply increases, there’s more of the good available, which puts downward pressure on price and typically lowers the equilibrium price (assuming demand stays the same). When demand increases, more buyers want the good at each price, shifting demand up and pushing the equilibrium price higher. The phrase “and vice versa” reflects the opposite movements: a decrease in supply tends to raise prices, and a decrease in demand tends to lower them. The other options describe related ideas but not the mechanism behind price changes. Price competition refers to pricing strategies among sellers, a free enterprise economy is a broad system, and profit is an outcome or incentive, not the process that explains how prices move in response to supply and demand. So the best answer is the concept of supply and demand.

This question is about how supply and demand determine prices in a market. When supply increases, there’s more of the good available, which puts downward pressure on price and typically lowers the equilibrium price (assuming demand stays the same). When demand increases, more buyers want the good at each price, shifting demand up and pushing the equilibrium price higher. The phrase “and vice versa” reflects the opposite movements: a decrease in supply tends to raise prices, and a decrease in demand tends to lower them.

The other options describe related ideas but not the mechanism behind price changes. Price competition refers to pricing strategies among sellers, a free enterprise economy is a broad system, and profit is an outcome or incentive, not the process that explains how prices move in response to supply and demand.

So the best answer is the concept of supply and demand.