Markets eliminate surpluses through falling prices, which increase quantity demanded and decrease quantity supplied.

Question

Quizplus · Accepted Answer

When there is a surplus in the market, there is an excess quantity supplied that cannot be consumed by the buyers. In order to eliminate this surplus, sellers may lower their prices to increase the quantity demanded by buyers. As the price falls, more buyers will be willing to purchase the product, reducing the surplus. Ultimately, the market will reach a new equilibrium point where quantity demanded equals quantity supplied, and the surplus will be eliminated.

Markets Eliminate Surpluses Through Falling Prices, Which Increase Quantity Demanded