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In September 2014 Apple was selling a gold version of the 128GB iPhone 6 for $949
In September 2014 Apple was selling a gold version of the 128GB iPhone 6 for $949. Two days later that phone was advertised on eBay for a starting bid of $1,625. Was this evidence of a market shortage or a market surplus?
Expert Solution
The above examples is of Market Shortage
- Since the price of the iPhone has increased significantly online, it indicates that there is strong demand and the supply has not been able to match the demand. Therefore, the bids are at a higher price than the original price.
As a general rule -
- Price will increase as compared to original levels when there is a market shortage
- Price will decline as compared to original levels when there is a market surplus.
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