While shopping you discover that your favorite department store has lowered the price on a new MP3 player that you wanted to buy. You rush into the store, only to find that they are sold out. What concept does this scenario illustrate?

Question

anonymous · Answer

A.	laissez faire
B.	law of diminishing returns
C.	scarcity

anonymous · Answer

Law of demand, as price falls demand will rise.  The shift in price will cause the QUANTITY demanded to increase.

anonymous · Answer

Laissez faire isn't correct because that's more talking about an economy in which the government doesn't intervene...

anonymous · Answer

Laissez faire is an economic environment where the transactions between private parties are free from government intervention...so (A) would be incorrect...

Law of diminishing return staes that the tendency for a continuing application of effort or skill toward a particular project or goal to decline in effectiveness after a certain level of result has been achieved hence (B) would also be incorrect.

Scarcity is Insufficiency of amount or supply...as we see that the mp3 players have been sold out..hence the supply was not able to meet the demand for all consumers of mp3..hence it shows that this scenario relates to scarcity.

hope that helps... :)

anonymous · Answer

wen prices r low so demand becoms high.