What may occur due to competition among sellers resulting in reduced prices and profits?

The scenario described in the question pertains to the dynamics of market competition and its influence on pricing and profitability. When competition among sellers intensifies, they often respond by lowering prices in an attempt to attract more buyers. This price reduction can lead to a situation where the quantity of goods available exceeds the current demand, resulting in oversupply.

In an oversupply situation, there is more product available than there are buyers willing to purchase at the prevailing prices, which further compels sellers to lower prices to stimulate sales. Consequently, profits for these sellers may decline because they are selling at lower prices while also potentially facing a higher cost of maintaining excess inventory.

Therefore, oversupply is vividly illustrated as a direct consequence of competitive pressure among sellers leading to reduced prices and profits. This helps illuminate the importance of understanding market forces and their implications for seller strategies in maintaining profitability.