I have learned that market price is a combination of supply and demand, where equalibrium determines where the quanity supplied, and the quanity demanded meet together so that everything is sold and both costomers and salesmen are happy. this allows satbility in an economy so that there is no extra goods left over that weren't sold, and that there aren't still any coustomers looking for that good.
Market price is determined by the supply curve of a product, and the demand curve of a product.
where if 10 items are supplied at $15, and 10 items are demanded $15, then the market price will be $15 and ten items will be sold. rather if 5 items are demanded at $20, and 25 items are supplied at $25, then there will be a problem as there will be a surplus of 20 items.
Remember when the Wii came out in 2007? nintendo didn't make enough of them to meet demand, so there was large compition to get a Wii. some were being sold for $500 dollars when nintendo was selling them for $250. there was a shortage of supply and it took nintendo a year to respond.
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