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5 July, 17:52

Potato crops in Idaho have been damaged by plant disease, causing a scarcity of potatoes in the market. What is the most likely effect of the scarcity? A. The price of potatoes will decrease. B. The demand for potatoes will increase. C. The demand for potatoes will decrease. D. The price of potatoes will increase.

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  1. 5 July, 21:01
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    D. The price of potatoes will increase.

    Explanation:

    Should the market experiences scarcity, or a surplus in the supply of a commodity, the laws of demand and supply applies. The price of products and services is determined by the intersection of the demand and supply curves. If the demand is high and supply is low, then the price rises.

    The supply curve slopes upwards. A decrease in supply causes the supply curve to shift to the left. It means the demand and supply curves will meet at a higher price. A low supply of potatoes will mean many buyers competing for a few supplies. These will cause the demand for potatoes to increase and consequently push the prices higher.
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