When do the laws of supply and demand have less effect on prices?
A. When a good or service is newB. when outside factors cause changes
The laws of supply and demand typically have less effect on prices in two situations: when a good or service is new and when outside factors cause changes.
A. When a good or service is new: When a product or service is introduced to the market, it often lacks a well-established demand and supply. In this case, the prices are more likely to be dictated by factors such as production costs, marketing strategies, and customer perceptions rather than the forces of supply and demand.
B. When outside factors cause changes: Sometimes, external factors can temporarily disrupt the typical supply-demand dynamics and impact prices. For example, a sudden change in regulations, government policies, natural disasters, or global events can affect the availability or production costs of goods and services. These external factors can create a situation where prices may not be solely determined by supply and demand.
It is important to note that while these situations can temporarily shift the influence of supply and demand, in the long run, they still play a significant role in determining prices. Eventually, the market forces of supply and demand will adjust and bring prices back to equilibrium.