According to Adam Smith, what happens when the supply of a product decreases?

1 answer:

4 0

The mechanism establishing natural price by Adam Smith connects with effective demand and free competition. If you cut the supply of goods, the demand for them is higher. Because of this, there competition between buyers. Afraid not get the right product, they agree to buy it at a higher cost. The market price will rise. When supply and demand are roughly equal, the market value corresponds to approximately natural.

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