Price decreases for a product are most likely to occur when

Question

BlackTom AI · Accepted Answer

We start by restating the question and listing all answer choices to frame the scenario clearly.
Question: Price decreases for a product are most likely to occur when
Options:
- supply and demand are equal
- demand exceeds supply
- none of these are relevant
- supply exceeds demand

Now, evaluate each option individually and explain the intuition behind it.
Option 1: supply and demand are equal. When supply equals demand, the market is in equilibrium, typically resulting in a stable price where there is no strong pressure for price to move up or down. This scenario does not inherently imply a price decrease.
Option 2: demand exceeds supply. A situation where demand outstrips supply creates a shortage. In response, buyers compete for the limited quantity, and sellers often raise prices to balance the excess demand. Therefore, this condition tends to push prices upward, not downward.
Option 3: none of these are relevant. This is a broad dismissal and ignores standard economic principles about how surpluses and shortages affect prices. Since there are defined mechanisms linking supply and demand imbalances to price movements, this option is not accurate.
Option 4: supply exceeds demand. A surplus occurs when there is more supply than buyers want at the current price. To clear the excess supply, sellers typically lower prices to attract buyers, resulting in a price decrease.
In summary, the presence of a surplus (supply > demand) creates downward pressure on price as sellers attempt to clear excess inventory, whereas the other scenarios either imply stable prices (equilibrium) or upward pressure (shortages). The incorrect options fail to align with the standard surplus/shortage-price dynamics or misinterpret equilibrium effects.

Introduction to Personal Finance CP - 2 - Beatty - Preparatory Academy - 1st Semester - 2025/2026 Final Exam- Requires Respondus LockDown Browser

Price decreases for a product are most likely to occur when

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Introduction to Personal Finance CP - 2 - Beatty - Preparatory Academy - 1st Semester - 2025/2026 Final Exam- Requires Respondus LockDown Browser

Price decreases for a product are most likely to occur when

查看解析

登录即可查看完整答案

类似问题

Assume that a competitive industry producing a normal good is in long-run equilibrium. If average consumer income decreases, which of the following changes will occur?

Which of the following describes how a market will respond when the scarcity of a good increases?

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Due to the Covid-19 Pandemic, the demand for face masks and sanitizers have greatly increased which also increased the price for these products by 50%. Which of the following statements is true?

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At an initial equilibrium, demand curve shifts to the left, supply curve remain unchanged. This creates and prices will _ restore the market equilibrium.

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