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Hoarding is one of the causes as well as effects of price rise. Give reason. |
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Answer» At times, when the demand of some specific products is more, the producers or traders hoard the goods in their god owns or shops. Then they create an artificial scarcity on temporary basis and later sell goods at higher prices. Innocent customers consider this artificial scarcity as true and become prepared to buy goods even at higher prices. When the price rises, then after selling some products, again the sellers hoard goods in order to earn higher prices. When the price rises, then after selling some products, again the sellers hoard goods in order to earn higher profits in future. Thus, the producers and traders take undue advantage of consumer’s demands and ignorance and sell he hoarded goods at higher prices and earn higher profits. Thus, hoarding becomes a cause and also an effect of price rise. |
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