If resale price maintenance leads to a shift in the market supply that exceeds the shift in the market demand, the quantity of the good sold will ________and the manufacturer's profit will _________ .

Question

Quizplus · Accepted Answer

If the shift in market supply exceeds the shift in market demand, it means there will be more supply of the product than demand for it in the market. This excess supply will result in a decrease in the quantity of the good sold. At the same time, if the manufacturer is enforcing resale price maintenance, they are setting a minimum price for the product, which may not be met by this excess supply. As a result, the manufacturer's profit will also decrease.

If Resale Price Maintenance Leads to a Shift in the Market