Question

Suppose you produce T-shirts, and the equilibrium price for a T-shirt is $5. You haven't really done much research, so you decide to charge a price of $3 per shirt. At this price, there will be an _____ of T-shirts.

Answer 1

excess demand, as its a lower price than the normal price and much lower than the competition, people will flock over to that shirt brand that is only 3$, and supply will quickly decrease, until none is left, because when a company can go lower than another, people will normally go for the lower price goods as long as its of similar quality.