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mel-nik [20]
3 years ago
10

How does a market surplus affect prices and consumer demand for a product?

Business
1 answer:
s2008m [1.1K]3 years ago
8 0

Answer

<u>Market surplus will lower the prices for goods and increase the consumer quantity demand for the products.</u>

Explanation

A market surplus is when there is excess supply. The quantity supply in this case is greater than the quantity demanded. Producers will be faced with a hard time to sell all their goods. This will make them lower their prices to make their products more appealing to consumers. Firms will also have to lower market prices in order to stay competitive. In response to the reduced prices, consumers will increase the quantity demanded thus moving the market to an equilibrium price and quantity. This is a case where excess supply has exerted a downward pressure on the prices of the products.



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So, this is considered as the mirror image of the bargaining power of buyers and so it tends to refer to the pressure that suppliers can put on companies by raising their prices, and lowering their quality, or reducing the availability of their products.

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