What are surplus and shortage in the market?

Marketing Dec 26, 2020

Expert Solution

A market surplus arises because there is overproduction- the amount produced is higher than the demanded amount. Certain manufacturers would not be able to offer all the products in this circumstance. This would force them to reduce their cost in order to create their commodity further attractive.

A market shortage happens because there is over demand, which is the commodity demanded is larger than the available amount. Therefore, consumers are not able to purchase according to their requirements.

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