question 27\nscented candles with cotton wicks are sold in a perfectly competitive market. a shortage in the…

question 27\nscented candles with cotton wicks are sold in a perfectly competitive market. a shortage in the market for cotton drives up cotton prices. which of the following best explains the effect of the cotton shortage on the market price of scented candles?\na) the price will increase due to a decrease in quantity supplied.\nb) the price will increase due to an increase in quantity supplied.\nc) the price will decrease due to a decrease in supply.\nd) the price will increase due to a decrease in supply.\ne) the price will decrease due to a decrease in demand.

question 27\nscented candles with cotton wicks are sold in a perfectly competitive market. a shortage in the market for cotton drives up cotton prices. which of the following best explains the effect of the cotton shortage on the market price of scented candles?\na) the price will increase due to a decrease in quantity supplied.\nb) the price will increase due to an increase in quantity supplied.\nc) the price will decrease due to a decrease in supply.\nd) the price will increase due to a decrease in supply.\ne) the price will decrease due to a decrease in demand.

Answer

Brief Explanations:

Cotton is an input for scented candles with cotton wicks. A shortage in the cotton market driving up prices reduces the supply of scented candles (left - ward shift of the supply curve). In a perfectly competitive market, when supply decreases and demand remains the same, according to the law of supply and demand, the equilibrium price increases.

Answer:

D. The price will increase due to a decrease in supply.