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Agree or disagre and why? Price increases

Question : Agree or disagre and why? Price increases : 1678

Agree or disagre and why?

Price increases and decreases are linked to the current state of economy that surrounds a product. When discussing these price fluctuations on a product, it is important to look into two core economics, (market equilibrium and price equilibrium). Market equilibrium,(or the set rate of the economy), is when the supply in the market is equal to the demand in the market. Price equilibrium, is the price of a good or service when its supply is equal to the demand in the market. Whether a price on a product or service increases or decreases is dependent on if the economy is above, or below market equilibrium. For example, if a price on a product or services rises, it is likely that the demand of that product was higher than its supply. This creates a shortage in the product.On the other hand, if a price on a product or service drops, it is likely that the demand for it has decreased. this creates a surplus of a product. In order to take care of the surplus of a product, prices must go down and sales must go up. This method could be compared to a sales rack where a collection of different clothing styles are 40% off. This price drop heightens a customers interest in spending. For example Target's stores contain sales racks in order to downsize the surplus of outdated styles//products. this method creates more room for newer inventory.

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Economics 1 Year Ago 154 Views
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