So here's an example of a standard Supply & Demand Relationship for an Individual Supplier:
As a supplier, for 1 dollar, I'll produce 1 unit of something. For 2 dollars, I'll produce 2 units, for 3 dollars, I'll produce 3 units, and so on and so forth up until 10 dollars for 10 units.
At 1 dollar, I'll have 10 buyers, at 2 dollars, I'll have 9 buyers, at 3 dollars, I'll have 8 buyers...all the way up to having 1 buyer at 10 dollars.
As you can see, there's an inverse relationship with the equilibrium price being right in the middle: Producing 5 units with 5 buyers buying each of them at 5 dollars per unit. Simple...
But now I'm wondering what would happen if there was a surplus. Ideally I should've made 5 units at 5 dollars each and sold them all to 5 buyers. But let's say I make 6 units, thinking I'll be able to sell all of them for 6 dollars each, but I only end up selling 4 of them to 4 buyers. If I wanted to sell all 6, I would have to sell them at 4 dollars each to reach equilibrium. The problem is if I sell 6 of them for 4 dollars each, I'll make less money than I would selling only 5 of them for 5 dollars each.
So do I reduce the price to 4 dollars so I can sell all 6 of them, making 24 dollars? Or do I sell 5 of them at 5 dollars each, making 25 dollars, and then sell the remaining one for less money?
Thanks in advance for answers.