When an industry has excess capacity,market prices may drop well below their historical average.If this drop is temporary,it is called:
A)dropped prices.
B)distress prices.
C)substitute prices.
D)low-average prices.

Question

Quizplus · Accepted Answer

When an industry experiences excess capacity, leading to market prices dropping significantly below their historical averages, and if this drop is temporary, the term used to describe this phenomenon is "distress prices." This reflects the urgent need to sell excess inventory even if it means selling at much lower prices than usual.

When an Industry Has Excess Capacity,market Prices May Drop Well