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Question

14

In the basic supply-and-demand model, which combination of supply and demand leads to the LOWEST prices?

O A.

. high supply and low demand

О в.

high supply and high demand

O C.

low supply and high demand

O D.

low supply and low demand

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Answer

D. Low supply and low demand.

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The basic supply and demand model states that when supply is low and demand is high, prices will be higher. Conversely, when supply is high and demand is low, prices will be lower. Therefore, the combination of low supply and low demand will lead to the lowest prices.