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If automobile manufacturers are producing cars faster than people want to buy them,
- a)there is an excess supply and price can be expected to decrease
- b)there is an excess supply and price can be expected to increase
- c)there is an excess demand and price can be expected to decrease
- d)there is an excess demand and price can be expected to increase
Correct answer is option 'A'. Can you explain this answer?
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If automobile manufacturers are producing cars faster than people want...
If automobile manufacturers are producing cars faster than people want to buy them, there is an excess supply and price can be expected to decrease.
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If automobile manufacturers are producing cars faster than people want...
Excess Supply and Price Decrease
When automobile manufacturers produce cars faster than people want to buy them, it leads to an excess supply in the market. This means that there are more cars available than there are buyers willing to purchase them.
Impact on Price
In a situation of excess supply, manufacturers may be forced to lower prices in order to sell off their excess inventory. This is because they will likely face competition from other manufacturers who are also trying to offload their surplus cars.
Market Dynamics
The basic principle of supply and demand states that when there is an excess supply of a product, prices tend to decrease as sellers try to attract buyers. This creates a buyer's market where consumers have the advantage of choosing from a wide range of options at lower prices.
Consumer Benefits
For consumers, an excess supply of cars can be beneficial as they may be able to purchase a vehicle at a discounted price. This can lead to savings for buyers and potentially increase overall demand for cars in the market.
In conclusion, when automobile manufacturers produce cars faster than people want to buy them, it results in an excess supply which typically leads to a decrease in price. This can benefit consumers looking to purchase a car at a lower cost.
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If automobile manufacturers are producing cars faster than people want to buy them,a)there is an excess supply and price can be expected to decreaseb)there is an excess supply and price can be expected to increasec)there is an excess demand and price can be expected to decreased)there is an excess demand and price can be expected to increaseCorrect answer is option 'A'. Can you explain this answer?
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