Shortage, surplus and price mechanism, Macroeconomics

Assignment Help:

Shortage, Surplus and Price Mechanism:

A shortage is the situation in which the demand exceeds supply, which means producers are unable to meet the market demand for the product.

A surplus is the situation of excess supply in the market, and in which market demand falls short of the quantity supplied; which means the producers are unable to sell the entire produced goods in the market.

The price mechanism is the signalling and rationing device which prompts the consumers and producers to adjust with their demand and supply, correspondingly, in response to the shortage or surplus. Shortages make the price to raise prompting producers to produce more and consumers to demand for the fewer goods. Surpluses make prices to fall prompting the producers to supply the less and consumers to demand more goods. In either case, the price mechanism attempts to clear shortage or surplus in market.

 


Related Discussions:- Shortage, surplus and price mechanism

Show the three approaches of measuring national income, Illustrate the thre...

Illustrate the three approaches of measuring national income? Show that these three approaches give identical result. Explain private saving. How is the private saving used

Composition and direction of trade, Composition and Direction of Trade: ...

Composition and Direction of Trade: The impact of trade reforms can be observed from the changing structure of India's  foreign  trade in  terms of diversity  of  production

Codinal theory - consumer choice concernin utility, Ordinal Theory: A...

Ordinal Theory: A Short Note In ordinal approach, utility is measured ordinally i.e., qualitatively (not numerically or quantitatively). Alternatively, consumer can rank her

Why the group is considered powerful, Evaluate your workplace and identify ...

Evaluate your workplace and identify a group that has "power" in the organization. Analyze why the group is considered powerful. a. What are the elements that contribute to the gro

KEYNESIAN CROSS MODEL, In the keynesian cross model, assume the consuption ...

In the keynesian cross model, assume the consuption function is given by C=200=.75(Y-T) and planned investment=100, government purchases and taxes are each of them 100. a) Draw a g

Gross domestic production, why is imports subtracted from the expenditure a...

why is imports subtracted from the expenditure approach

Monetization of public debt, What are the pros and cons of monetization of ...

What are the pros and cons of monetization of public debt

What are the explicit costs, A young chef is considering opening his own su...

A young chef is considering opening his own sushi bar. to do so, he would have to quite his current job, which pays him $20,000 a year , and take over a store building that he owns

News involving a legal issue, Your Assignment is to find a news article inv...

Your Assignment is to find a news article involving a legal issue that interests you and report on it in the Discussion Board. Please provide a link to the article so that others c

Assumed in constructing a typical production, Which of the following is ass...

Which of the following is assumed in constructing a typical production possibilities curve? a. the economy is engaging in international trade. b. production technology is fix

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