Question

Why would it benefit a company to restrict its supply of a product to consumers when consumer demand for the product is high? It will reduce the cost of production. It will increase the cost of production. It will increase the price of the product. It will not affect the price of the product.

Answer 1

It will increase the price of the product. Due to the fact that more people buy it, so why not raise the price a bit? Hope this helps!

Answer 2

It will increase the price of the product.

Step-by-step explanation:

The Law of Supply and Demand determines that the price of goods and services varies according to their scarcity. Thus, if a company determines the supply of a good, it can influence the price by restricting supply. This is common in monopolies when only one company provides certain kind of good.