Question

John is selling his pizza for $6 per slice in an area of high demand. However, customers are not buying his pizza.

Using what you learned about the principles of equilibrium, write three to four sentences about how John could solve his problem.

Answer 1

John's prices are too high. This is causing excess supply: John's workers can make many pizzas, but at these high prices, consumers are only demanding a small amount. If the price per slice decreased, consumers would demand more of John's pizza. This means that business would move toward a point of equilibrium, where supply matches demand at the appropriate price.