If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Question

Quizplus · Accepted Answer

An increase in the number of firms producing mouthwash increases supply, which tends to lower prices, while increased consumer preference raises demand, which tends to increase prices. The net effect on equilibrium price depends on the relative magnitudes of these changes in supply and demand.

If the Number of Firms Producing Mouthwash Increases and Consumer