![]() ![]() For example, if ticket prices are set, and the show is unpopular, it is unlikely the theatre will cut prices but instead accepts surplus seats. However, prices may be rigid and not fall because of difficulties or unwillingness to cut prices. In a free market, we would expect a surplus to be solved by cutting prices – leading to lower demand and less incentive to supply. For a short time, the supply may be greater than the willingness to buy A firm may wish to ‘flood’ the market with supply in order to gain market share and push rival firms out of business. Some government’s offered public support for national steel companies, so supply was kept artificially high. ![]() In global markets, there was a significant surplus of steel because China increased output and other firms were slower to cut back on production. For example, during the Covid Lockdown train firms were left with surplus train seats as travel fell 90%. In a free market, a firm could be left with a surplus, if there is a sudden change in market demand.
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