Supply and demand price rises

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Why do you believe that it is important for managers to understand both short run and long run supply and demand? Cite one hypothetical or real life example that illustrates your response.

The demand for audio CDs has greatly increased over the last decade. According to the laws of supply and demand, price rises as demand increases. The price of CDs, however, has fallen during this period. Explain the apparent contradiction.

Reference no: EM1349440

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