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The toy and watch markets.
Member rating: No Rating | Words: | Submitted: Tue Sep 23 2003
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The toy and watch markets A) Equilibrium price is as shown in the diagram when the planned supply meets the planned Demand at OP1, OQ1, where the price is at £80. It is the price at which at which the producers maximise their net profit. Excess Demand occurs when theirs a greater demand than the quantity supplied at a certain price, e.g. at £20. When the price is set at £20 bellow the equilibrium, the demand is for 178 000 dolls, however the supply is being limited at only 76 000, creating an excess demand of 102 000 dolls. Bi) Black market occurs as results of excess demand when the price is set bellow the equilibrium. If supply were to meet demand in the market then this would not occur. Black market is often illegal, however reselling the dolls or watches is not. Entrepreneurs are signalled by the excess demand and may...
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