Answer to Question #12451 in Microeconomics for Chijerk

Question

the implication of global economic meltdown to demand and supply

Answer 1

Once the companies publicly declared the state of their insolvency and the huge loses experienced by them, the investors’ confidence was eroded. The result was a stampede where both small and large investors wanted to off load their shares in the market. In line with the principle of demand and supply, as more shares are off loaded into the market, the prices dropped as far investors showed interest in investing.