Demand and Supply

The demand for Internet purchasing(foods) is declining, but the number of Internet shop(foods) opening is increasing. We know that the price of foods will fall and the quantity of Internet shop opening is uncertain. Is this analysis correct?

Please explain in detail to me.

Thanks a lot.

2 Answers

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  • Anonymous
    9 years ago
    Favorite Answer

    it is because the startegy,

    offical goods have warrant, is more desire than the unoffical goods at the same price,

    after the price is decreased to $80~120, the grey goods A will also decrease their price to $60~80, mostly the grey goods still cheaper and still here, this startegy is to stop more grey goods come in to the market by decrease their profit or make them lost.

    the demand of A is increased, because the price is decrease, there maybe have a excess demand, that depends on the value of the customer view is it change? for example after the market price is known as $80, the value of goods A in customer's view, it may be fixed, there is no chance to increase the price, the demand is still the same after that.

    The reason of A's price keep falling with increasing demand, is not true, it still can use "demand and supply curve" to show that the price is quite fit to the market. First, the supply of A is increase by the import of grey goods. secondly, the price dropped, the demand of A (VALUE) is decreased, is a mental effect

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  • 9 years ago

    In the given case, the demand for purchasing(foods) decreases and the supply of Internet shop(foods) increases. The price of foods will fall but the quantity of Internet shop opening is uncertain. It depends on the relative magnitude of decrese in demand and increase in supply.

    When demand decreases, holding supply constant, the equilibrium price will fall. When supply increases, holding demand constant,the equilibrium price will fall. Therefore, when there is both decrease in demand and increase in supply, the equilibrium price must fall.

    When the decrease in demand is greater than the increase in supply,the quantity of Internet shop opening will fall.

    When the decrease in demand is smaller than the increase in supply,the quantity of Internet shop opening will rise.

    When the decrease in demand is equal to the increase in supply,the quantity of Internet shop opening will remain unchanged.

    Source(s): myself
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