Question

Marcus sells washing machines from his store on a main street in his city. He normally sells ten washing machines a month. He has been considering ways to improve his sales and has improved his advertising, his store signage, and utilizes social media to contact potential buyers in the most likely demographic group, but has only improved sales by one washing machine a month. This month he decided that if he has three times more washing machines in his store and sells them at the same price he is now offering them, he will sell three times more washing machines. What is the fundamental flaw in his plan?

Answer 1

Answer:

Demand for a product is not necessarily increased just because there is a greater supply, in addition, based on his sales, he has no doubt reached the equilibrium price.

Explanation:

The law of supply and demand is the basic principle on which a market economy is based. This principle reflects the relationship between the demand for a product and the quantity offered of that product taking into account the price at which Sell ​​the product.

Thus, depending on the price in the market of a good, the bidders are willing to manufacture a certain number of that good. Like the plaintiffs they are willing to buy a certain number of that good, depending on the price. The point where there is a balance because the plaintiffs are willing to buy the same units that the bidders want to manufacture, for the same price, is called the market equilibrium or breakeven point.

According to this theory, the law of demand establishes that, keeping everything else constant (ceteris paribus), the quantity demanded of a good decreases when the price of that good increases. On the other hand, the law of supply indicates that, keeping everything else constant (ceteris paribus), the quantity offered of a good increases when its price does.