A Japanese restaurant owner finds that there are many unsold sashimi (魚生). With an aid of demand and supply diagram, explain how adjusting the selling price can help. (L5)

There is many unsold sashimi because surplus exists in the market.

The seller can lower the selling price to the market clearing price, P*. According to the law of demand, the lower the price of a good, the greater its quantity demanded, other factors being constant. The quantity demanded will increase after the price decreased. The quantity demanded equals to the quantity supplied at P*, and the market is cleared.