Final answer:
Competition between suppliers lowers prices, while competition among buyers increases them. Price ceilings and floors do not shift the demand or supply curves directly but create surpluses or shortages at the regulated price levels.
Step-by-step explanation:
The correct answer to the question is b. down; up. Competition between suppliers tends to drive prices down because each supplier will try to attract consumers by offering the best deal, which often involves lowering the price. On the other hand, competition between buyers tends to drive prices up, as each buyer will be willing to pay a little more to secure the desired product or service, especially when the product or service is limited.
Regarding the question about price ceilings and floors, a price ceiling will usually shift neither demand nor supply directly; instead, it sets the maximum price that can be charged, which can lead to shortages if set below the equilibrium price.
A price floor, conversely, is a minimum price set above the equilibrium price, which can lead to surpluses. Neither alters the underlying curves of supply or demand but rather creates excesses and shortages at the mandated price levels.