When the prevailing price is above the price where supply intersects demand:
"price falls because there is a shortage, so producers cut prices to try to attract buyers." |
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"price rises because there is a surplus, so buyers bid up the price." |
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"price falls because there is a surplus, so producers cut prices to try to attract buyers." |
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"price rises because of a shortage, so buyers bid up the price." |
When the prevailing price is above the price where supply intersects demand
"price falls because there is a surplus,so producers cut prices to try to attract buyers
(The price where supply intersects demand is called the equilibrium price,where demand = supply,if the prevailing price is above the equilibrium price,it indicates that demand is less than supply,which means that there is a surplus,in such a situation the producers cut their prices,so as to attract buyers to buy their products and increase their sales)
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