Summary
In a small town with high demand but zero supply of bananas, Peter seizes the opportunity by becoming the sole seller and reaping large profits. However, when Sarah enters the market as a competitor, the increased supply leads to a decline in Peter's profits over time. This scenario demonstrates the basic economic principle of supply and demand, showcasing how competition can impact profitability in a market.
Scenario Setup
Introduction to a scenario in a small town where there is zero supply of bananas despite a decent demand for them.
Peter Starts Selling Bananas
Peter recognizes the lack of banana sellers and enters the market, initially experiencing huge profits as the sole seller.
Sarah Enters the Market
Sarah starts selling bananas, increasing the supply and competing with Peter, leading to a decrease in Peter's profits over time.
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