Agree or disagree and why?
Price increases and decreases are linked to the current state of the economy that surrounds a product. When discussing these price fluctuations on a product, it is important to look into two core economics, (market equilibrium and price equilibrium). Market equilibrium, (or the set rate of the economy), is when the supply in the market is equal to the demand in the market. Price equilibrium is the price of a good or service when its supply is equal to the demand in the market. Whether a price on a product or service increases or decreases is dependent on if the economy is above, or below market equilibrium. For example, if the price of a product or service rises, it is likely that the demand for that product was higher than its supply. This creates a shortage in the product. On the other hand, if the price of a product or service drops, it is likely that the demand for it has decreased. This creates a surplus of a product. In order to take care of the surplus of a product, prices must go down and sales must go up. This method could be compared to a sales rack where a collection of different clothing styles are 40% off. This price drop heightens a customer's interest in spending. For example, Target's stores contain sales racks in order to downsize the surplus of outdated styles/products. This method creates more room for newer inventory.
Agree or disagree and why?
Price increases and decreases are linked to the current state of the economy that surrounds a product. When discussing these price fluctuations on a product, it is important to look into two core economics, (market equilibrium and price equilibrium). Market equilibrium, (or the set rate of the economy), is when the supply in the market is equal to the demand in the market. Price equilibrium is the price of a good or service when its supply is equal to the demand in the market. Whether a price on a product or service increases or decreases is dependent on if the economy is above, or below market equilibrium. For example, if the price of a product or service rises, it is likely that the demand for that product was higher than its supply. This creates a shortage in the product. On the other hand, if the price of a product or service drops, it is likely that the demand for it has decreased. This creates a surplus of a product. In order to take care of the surplus of a product, prices must go down and sales must go up. This method could be compared to a sales rack where a collection of different clothing styles are 40% off. This price drop heightens a customer's interest in spending. For example, Target's stores contain sales racks in order to downsize the surplus of outdated styles/products. This method creates more room for newer inventory.
