In the absence of government intervention, several potential scenarios are likely to occur due to the surplus of the game systems:
1. Price reductions: Retailers will likely try to sell off the surplus stock by reducing prices. This can attract consumers who were previously hesitant due to high prices, leading to increased sales.
2. Clearance sales: Retailers may organize clearance sales or promotional offers to further reduce the excess inventory. This could involve bundling the game systems with other products, offering discounts, or providing incentives like free games or accessories.
3. Market saturation: If the surplus is significant and the demand remains low, retailers might struggle to sell all the game systems even with price reductions. This could result in stores continuously holding on to excess stock, leading to a saturated market with limited sales.
4. Return to the manufacturer: Retailers often have agreements with manufacturers to return unsold merchandise. If the surplus remains unsold over an extended period, retailers may choose to return the game systems to the manufacturer for a refund or credit.
5. Secondary market: Some surplus game systems may end up in the secondary market, such as online auction websites or reseller platforms. Individuals or smaller retailers may purchase surplus stock at discounted prices and resell them to interested buyers.
It's important to note that without government intervention, market forces like supply and demand will primarily drive the outcome. However, specific outcomes may vary based on factors such as the scale of surplus, the popularity of the game system, and the overall economic conditions.
A new game system was very popular during the holiday season, but, as in the case with many toy fads, sales have dropped off significantly in the following months. A surplus of the systems now line the shelves of retailers across the country. In the absence of government intervention, what is likely to occur?
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