Question

What is a market surplus, and how does the market attempt to resolve a surplus?

Answer 1

Ans) Market surplus is that condition in the market where the supply of a product is higher than the demand of the product i-e market has more supply of goods.

In this situation where supply is higher than demand, few sellers can't sell their goods, so to make their goods more attractive to increase their sales, they have to reduce the prices of the good .With decrease in prices of goods, consumer will be more interested to purchase that good at reduced prices. This will lead to increase in demand and with this increasing demand , the surplus of goods will begin to fall. This will continue till the demand and supply of good becomes equal.This is how market resolves the surplus.