Buy custom Who Determines The Prices Of Goods In Market? Government Or Free Forces Of Market
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| Topic: |
Business
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| Number of pages / Number of words: |
12 / 3274 |
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Prices will fall until supply and demand are again in equilibrium at point P.
When either demand or supply changes, the equilibrium price will change. For example, good weather normally increases the supply of grains and oilseeds, with more product being made available over a range of prices. With no increase in the quantity of product demanded, there will be movement along the demand curve to a new equilibrium price in order to clear the excess supplies off the market...
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With no increase in the quantity of product demanded, there will be movement along the demand curve to a new equilibrium price in order to clear the excess supplies off the market. Consumers will buy more but only at a lower price. This can be illustrated graphically as follows:
[pic]
Likewise a shift in demand due to changing consumer preferences will also influence the market price...
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