The law of demand states that quantity demanded is Inversivly related to the price. Please explain the sellers behavior Firms will react to a shortage (excess demand)bythey do this?prices. Why willThe firm will react to the shortage byincreasing the prices to reduce the demandand bring prices back at an equilibrium pricelevel. In any market, when the demand for aproduct is high, firms will result to increasesits price , this is according to the law ofdemand.

The Law of Demand states that when the price is higher, consumers tend to consume or demand a lower…

Answered: Firms will react to a shortage (excess…

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Firms will react to a shortage (excess demand) prices. Why will by they do this?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 55P: Table 3.9 illustrates the markets demand and supply for cheddar cheese. Graph the data and find the...

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Question

The law of demand states that quantity demanded is Inversivly related to the price.

Please explain the sellers behavior

Firms will react to a shortage (excess demand)
by
they do this?
prices. Why will
The firm will react to the shortage by
increasing the prices to reduce the demand
and bring prices back at an equilibrium price
level. In any market, when the demand for a
product is high, firms will result to increases
its price , this is according to the law of
demand.

Definition Definition Economic principle that states that as the price of a good or service increases, the quantity demanded by consumers decreases, while a decrease in price leads to an increase in quantity demanded, assuming all other factors affecting the demand remaining constant.

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