How does increasing supply and decreasing demand affect prices?

Question

help?

Answer 1

It's fairly simple. If the supply of an item goes up there are more people trying to sell that particular item then there are buying it. If demand has not increased along with the supply then the seller or supplier will not sell enough of his goods to make their desired profit. He will also probably have unused goods and wasted time and money producing the goods. Therefor, he would have to lower is prices in hopes that people who did not need (or demand) the item before will purchase it. On the flip side if demand rises but the supply does not then the seller can usually raise his prices. This is because more people need (or demand) that item and are willing to pay higher prices for it. Hope this helps