Suppose a surplus exists in the market for swimwear.What would an economist predict will happen?

Question

Quizplus · Accepted Answer

When there is a surplus in the market for swimwear, it means that there is excess supply at the existing price level. As a result, retailers may find it difficult to sell their inventory, leading to a fall in the price of swimwear. In order to clear the surplus, it is likely that retailers will reduce the price of swimwear to stimulate demand, leading to a decrease in the price of swimwear at retail outlets. Producers may not necessarily increase production unless they are confident that the increased demand will be sustained in the long run. Buyers are unlikely to increase demand in response to a surplus, as they already have enough supply available at the existing price level.

Suppose a Surplus Exists in the Market for Swimwear