To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Question

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Answer 1

Question

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

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Answer 2

Question

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

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Answer 3

Question

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

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Answer 4

Question

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

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Answer 5

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

Answer 6

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.

Answer 7

Chapter 2, Problem 1RE

To determine

To find a situation of excess demand that will result in an increase in the market price and the reason of excess supply result in a decrease in the market price.

Answer 8

Expert Solution & Answer

Explanation of Solution

The situation of excess demand increases the market price because when there is excess demand, that means the prevailing condition is the condition of shortage. Thus, in order to reap the profit, the seller increases the price of commodity and increase in price leads to decrease in demand. This turns to meet the demand and supply at equilibrium level.

The excess supply represents that demand is lower than supply. Thus, people have more option to buy commodity and they will not to prefer to buy goods at higher price. Thus, price start falling and reaches to equilibrium point.