Question

When the supply of a commodity exceeds the demand, prices generally rise. True False

Answer 1

It is false that prices rise when supply of a commodity exceed demand. It is a basic rule of supply and demand that when there is more demand for a product or commodity then there is supply the prices will rise, and vice versa. In other words, when there is more of something than people want, the price will fall, and when there is less of something than people want, the price goes higher.