Question

question 3
1 pts
why is there a tendency for this market to adjust from a price of p1 to p2?

insufficient production causes some consumers to offer to pay more for the product.
the presence of excess inventories forces firms to cut prices.
the presence of an economic shortage induces firms to offer lower prices.
the government wants to regulate the market.

Explanation:

At price $P_1$, quantity supplied exceeds quantity demanded, creating excess inventories. Firms will cut prices to sell off these inventories and move towards the equilibrium price $P_2$.

Answer:

The presence of excess inventories forces firms to cut prices.