Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?
A)The demand for Booth letters increases.
B)The supply of Lincoln letters increases.
C)The demand for Lincoln letters increases and the supply of Booth letters increases.
D)The demand for Lincoln letters decreases and the demand for Booth letters increases.

Question

Quizplus · Accepted Answer

If both the demand for Lincoln letters increases and the supply of Booth letters increases, it would create a more balanced market and lessen the price differences between the two. This is because the increased supply of Lincoln letters would create more options for buyers, making them less inclined to pay high prices for those letters, while the increased demand for Lincoln letters would push up the prices of those letters. On the other hand, the increased supply of Booth letters would make them more readily available, potentially reducing their prices, while the increased demand for those letters would drive up their prices. Together, these forces could lead to a smaller price difference between the two types of letters.

Auctions in Recent Years Have Resulted in Higher Prices Paid