Explain how the price system eliminates a surplus, Microeconomics

Assignment Help:

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.


Related Discussions:- Explain how the price system eliminates a surplus

Explain the meaning of inflation, Problem 1: (a) Explain the meaning of...

Problem 1: (a) Explain the meaning of inflation. (b) "Inflation is always and everywhere a monetary phenomenon." Discuss this statement. (c) Briefly explain the link betw

Functions of the central bank, Functions of the Central Bank: Currency...

Functions of the Central Bank: Currency issue and distribution: The Central Bank is the only institution empowered by law to issue currency notes and coins that are used as a

Optimum currency area, Optimum currency area: An optimum currency area...

Optimum currency area: An optimum currency area (OCA), also known as an optimal currency region (OCR), is a geographical region in which it would maximize economic efficiency

Macroecon, How might a “perfect” macro equilibrium be affected by (a) a sto...

How might a “perfect” macro equilibrium be affected by (a) a stock market crash; (b) the death of a president; (c) a recession in Canada; (d) a spike in oil prices?

Solow-swan model, Consider an economy, in which technological capabilities ...

Consider an economy, in which technological capabilities become obsolete. Use the Solow-Swan model and the knowledge spillover model to explain how its productivity growth rate dep

Explain elasticity coefficient, The elasticity coefficient is a number meas...

The elasticity coefficient is a number measured using price and quantity data to verify how responsive consumers are to changes in the price of a commodity.  The elasticity coeffic

Will governments follow good policies, Will Governments Follow Good Policie...

Will Governments Follow Good Policies? That governments can assist in development and growth doesn't mean that governments will. The broad experience of growth in developing ec

Risk premium, Risk Premium - The risk premium is amount of money which ...

Risk Premium - The risk premium is amount of money which a risk averse person would pay to keep away from taking a risk. *  Risk Premium: A Scenario - The person has a 5%

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd