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According to Adam Smith what happens when the supply of a product decreases?

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posted Jul 12 by Swati Tyagi

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According to Adam Smith, as demand for a product increases, so doesthe price. As example, if the demand for crude oil rises because anoil producer limits its production, the price of crude oil willtend to rise.
Prices of products can be reduced if production costs fall. Thusthe early price of a Model T Ford decreased due to assembly lineproduction and because the car could be produced for less, thedemand for it decreases. There are additional examples of this aswell.

answer Jul 13 by Ramesh Gowda
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