Question

Based on what we have learned about shortages and surpluses in a market, which one do you think is more harmful to the overall economy: a shortage or a surplus of a good? Provide a detailed explanation to demonstrate your thinking.

Answer 1

Answer:

A surplus of a good

Explanation:

Although we think that having a lot of something sounds like a good idea that is not always the case. Sometimes its better to have less of an item but therefore sell it for. For example when there was a shortage of hand sanitzer, masks and toilet paper people bought more of it for a higher price because they were afraid not to have enough. A surplus can take up a lot of storage and use up a lot of money. For example if a car manafacturer has a surplus of cars they are just sittinng there taking up space in a lot that needs to be payed for and mantained. I find it is especially bad if there are lot of that item and people are not interested in purchasing it. The company would be losing money because they would be most likely selling it at a lower price. Therefore the economy would be losing money while during a shortage they would be gaining money.