When there is excess demand there is?

Economics Dec 17, 2020

Expert Solution

When there is excess demand there is generally a rise in prices.

In any business operation, the goal is to maximize profit. When demand is high for a good or service, it would be in the best interest for the suppliers to raise the current price to a level that will make them the most money. If the price is raised too much, however, it risks damaging the level of demand by consumers, causing a drop, which could prevent the business from maximizing on possible profit.

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