In a competitive market, how does an increase in consumer demand affect the pricing power of firms, assuming supply remains constant?

In a competitive market, when consumer demand increases but the supply remains the same, firms experience greater pricing power. This is because more people want to buy the product, which creates a situation where the product is more valuable to consumers. For example, if many people suddenly want to buy a particular type of shoe and the number of shoes available doesn't change, sellers can raise prices since more buyers are competing for the same limited supply. As a result, firms can increase their prices to maximize profits, responding to the higher demand. Ultimately, this adjustment helps balance the market, as higher prices may eventually encourage more suppliers to enter the market.