What Happens When There is a Supply and Demand Imbalance?
An imbalance between supply and demand can have several consequences:
1. Surplus: When supply exceeds demand, it leads to a surplus, causing prices to fall. Entrepreneurs may need to offer discounts or promotions to clear excess inventory. 2. Shortage: When demand exceeds supply, it results in a shortage, driving prices up. Entrepreneurs can capitalize on this by increasing prices, but they must be cautious not to alienate customers. 3. Market Equilibrium: The ideal situation is market equilibrium, where supply matches demand, leading to stable prices and satisfied customers.