Overview
Market adjustments are crucial for understanding how prices and quantities in a market change in response to shifts in supply and demand. Firms must adapt their strategies to these changes to remain competitive and profitable. By analyzing market conditions, firms can make informed decisions about p...
Key Terms
Example: The supply of oranges increases during the harvest season.
Example: The demand for electric cars has risen due to environmental concerns.
Example: The market equilibrium for coffee occurs when the quantity supplied matches the quantity demanded.
Example: If the price of a product increases by 10% and demand decreases by 20%, the price elasticity is -2.
Example: A firm may lower prices to increase market share during a recession.
Example: A firm with high fixed costs may struggle during periods of low demand.