Question

A large supply of a product equals _____. Responses higher prices higher prices lower prices lower prices the same price the same price none of the above none of the above

Answer 1

A large supply of a product typically leads to lower prices due to the law of supply, which describes how suppliers are likely to reduce prices to move more goods and prevent excess inventory.

Step-by-step explanation:

When considering the impact of supply on pricing, the law of supply is a fundamental principle in economics to understand. It states a direct relationship between the price levels and the quantity of goods suppliers are willing to produce. Specifically, a large supply of a product generally leads to lower prices. This is because when suppliers have a lot of a product, they may reduce prices to encourage customers to buy more, thereby preventing excess inventory.

Similarly, the law of supply demonstrates that a higher price typically leads to a greater quantity supplied, as suppliers are incentivized to produce more due to the potential for increased revenue. However, when the question is how a large supply affects prices, it can be conclusively said that it results in lower prices, following the law of supply premise that all other variables are held constant.