2 years, 9 months ago
Why does the fear of inflation causes food prices to drop?
Are manufacturers over producing in relationship to demand and causing prices to fall?
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It's not that manufacturers are over producing which implies an increase in supply. Instead, it's that demand is decreasing because consumers are afraid to spend money. According to the economic model of supply and demand, with supply being constant, if demand decreases then market equilibrium occurs at a lower price.
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