Surpluses tend to drive competitive prices downward toward equilibrium,and shortages tend to drive competitive prices upward toward equilibrium

Question

Quizplus · Accepted Answer

This statement is true, as the basic principles of supply and demand state that when there is a surplus of goods or services, sellers need to lower prices in order to attract buyers and clear their inventory. Similarly, when there is a shortage, buyers are willing to pay more to obtain the product, which drives prices up toward equilibrium.

Surpluses Tend to Drive Competitive Prices Downward Toward Equilibrium,and Shortages