Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5 both are running out of beads to sell (they can't keep up with the quantity demanded at that
Price), then we would expect both Camille's and Julia's to

Question

Quizplus · Accepted Answer

Since both Camille's Creations and Julia's Jewels are running out of beads to sell at the market price of $5, this indicates that there is excess demand in the market. This means that consumers are willing to pay a higher price for beads but are unable to purchase them due to the shortage. Therefore, it makes sense for both companies to raise their price and increase their quantity supplied in order to meet the demand and maximize their profits. Option A (raise their price and reduce their quantity supplied) and Option C (lower their price and reduce their quantity supplied) would only exacerbate the shortage, while Option D (lower their price and increase their quantity supplied) would not allow them to capture the potential profits from the excess demand.

Camille's Creations and Julia's Jewels Both Sell Beads in a Competitive