Question

A set of collectible dolls was very popular during the holiday season, but, as is the case with many toy fads, has dropped off significantly in the following months. A surplus of dolls now lines the shelves of retailers across the country. In the absence of government intervention, what is likely to occur?
PLEASE HELPP!!

Answer 1

When there is a surplus of goods and the government does not intervene to stabilize prices, the prices will keep dropping in an effort to sell the good off.

According to the Law of Supply and demand:

• prices drop when the supply of a good is more than the demand to encourage people to buy more of the goods.

This will be done in an effort to at least recuperate some of the costs of production instead of suffering a total loss when people don't buy the goods as is the case with these holiday toys.

We can therefore conclude that if the government does not intervene to either subsidize the price of these toys or control their price, the prices will keep falling to entice people to buy the goods.

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