1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
sammy [17]
1 year ago
6

How do changing prices affect supply and demand?

History
1 answer:
-Dominant- [34]1 year ago
5 0

Typically changing prices only affect supply and demand when one creates artificial demand for it. In almost any cases, it is typically the supply and demand that affects the price changes.

We must firstly understand how supply and demand affect changing prices before we can understand the opposite effect. For example, if there is 100 units, and there are only 50 buyers, the supply is more than the demand. To generate artificial demand therefore, the supplier may lower the prices in an effort to sell off all units. On the other hand, if there is 100 units, but there are more than 100 buyers, than the supplier may raise the prices. This lowers the demand for the product as well as maximizing profits. This example assumes that there is only one supplier of the unit that is in demand.

If however, the supplier has competitors within the field (and is not bound by law to set a certain rate), they may change the prices to be lower than their competitors, in an effort to increase more demand for the prices. It would artificially drive down prices, thereby making profits less. If competitors are not able to survive with less profit and/or be able to lower their own prices, they would be forced to go out of business, either by closing or selling their shops. In turn, when the original company buys up their competitors assets, they then hold a monopoly or close to a monopoly of the given field. This allows them to artificially change the price on their own discretion, typically known for the term <em>price-gouging</em>. Historically in the United States, this has occurred, especially in the oil industry, but price-gouging of many consumer necessities have been banned and a official rate has been set for them.

Essentially, in a true supply and demand, changing a price to be higher than market value may lead to a lower demand, and therefore a surplus of the product, which leads to a artificial low price, while changing a price to be below market value may generate higher demand, which in turn leads to a artificial high price.

~

You might be interested in
The Indian independence movement eventually led to
OLEGan [10]
Many political and social organizations
8 0
3 years ago
Brainly if answer plixzzzzz
Rudiy27

Answer:

Benefit: Connects to the whole word.

Disadvantage: Fraud

Robbery

Explanation:

5 0
3 years ago
What was the Atlantic Slave Trade?
Jet001 [13]

Answer:

B: the shipment of African captives to the Americas

3 0
3 years ago
Please answer this question
ZanzabumX [31]
D) John D Rockefeller

6 0
3 years ago
Which amendment repealed the eighteenth amendment?
Karolina [17]
The 21st amendment repealed the 18th amendment.
7 0
3 years ago
Other questions:
  • What was a result of commodore matthew perry's voyage to japan in 1853?
    8·2 answers
  • Please help!!
    14·2 answers
  • What did Reagan do to encourage economic growth?
    10·2 answers
  • What internal improvements helped to tie the nation together?4 total
    13·1 answer
  • Who was the absolute monarch of France in 1798
    8·1 answer
  • In which American colonies were cash crops raised for sale or export?
    14·2 answers
  • Match each word or phrase with its correct description.
    15·1 answer
  • Please help me
    13·1 answer
  • What were boomtowns?
    14·1 answer
  • Give some examples of laws passed by Parliament in the years after the French and Indian War.​
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!