When there is an excess supply of goods the market increases its costs of production. suppliers...
When there is an excess supply of goods
| the market increases its costs of production. |
| suppliers lower prices, which encourages consumers to demand more. |
| consumers demand more, causing the price to increase. |
Homework Answers
Excess supply indicates that quantity supplied exceeds the quantity
demanded.
When quantity supplied exceeds the quantity demanded at a given price, unsold stock with sellers increases.
This induces sellers to lower the price so that consumers can be encouraged to demand more.
Hence, the correct answer is the option (2)
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When there is an excess supply of goods
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