Answered

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Help me please!!!!! With your own understanding so far, how could the problem of there being too much supply (surplus) or too much of a particular good, be fixed?

Sagot :

sebastiansierraocm

Answer:

The best way to solve a situation of oversupply or surplus of a particular good is to let the market correct itself until the supply matches demand, the market is in equilibrium again, and the surplus disappears.

Explanation:

The market mechanism would work like this: producers with oversupply would lower the price of their good in order to get rid of the glut, these lower prices would then increase demand, flocking more customers to the good. After some time, supply and demand would reach equilibrium again.

Obviously there could be cases in which producers would have to dispose of some unsold surplus before reaching equilibrium, in such a case we would have a market failure, and the government could step in by buying some of this excess production, and selling it at very low prices, or even giving it away for free.

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