USA HISTORY

Detailed explanation-1: -The real problem when goods lie on the shelves is that no-one can afford to buy the commodities; in other words “over-production” should really be called “under-consumption”. In another sense however, the term “overproduction” is valid; but it is not goods and services which have been over-produced, but capital.

Detailed explanation-2: -If underconsumption were the cause of crises, then crisis would not be cyclical but permanent. Overproduction demonstrates the necessary contradictions of a system that has the potential to produce real abundance, yet under which that very potential causes a breakdown every time it builds up.

Detailed explanation-3: -This happens when there are too little items produced (underproduction), or when too much items are produced (overproduction). Deadweight Loss: is the decrease in total surplus from the inefficient level of production.

Detailed explanation-4: -Overproduction, or oversupply, means you have too much of something than is necessary to meet the demand of your market. The resulting glut leads to lower prices and possibly unsold goods. That, in turn, leads to the cost of manufacturing – including the cost of labor – increasing drastically.