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Explain how the price system eliminates a surplus.
The meaning of surplus is that quantity demanded is less as compared to the quantity supplied. This will lead to downward pressure on price. Since price falls, quantity demanded rises and quantity supplied falls. This will carry on until quantity demanded is equal to quantity supplied.
Wage Differentials: Market structure alone does not account for all of the differences in wages and employment. Market wage differentials arise from various other sources, includin
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