Final answer:
The statement in the question is true, pointing out the real-life limits to the classic demand and supply model where demand does not always decrease with higher prices nor does it always increase with lower prices due to factors like perceived value and information dissemination.
Step-by-step explanation:
The statement is true: spill occurs when the capacity reserved for higher-price buyers is wasted because demand from the higher-price segment does not materialize, and spoilage occurs when higher-price buyers must be turned away because the capacity has already been committed to lower-price buyers.
The concept runs against the basic model of demand and supply, which typically argues that higher prices lead to lower quantity demanded and vice versa. In reality, these effects have limits—excessively high prices reduce demand over time, while very low prices can increase demand even if quality is lower. This balance is essential for maintaining market equilibrium, where the quantity demanded equals the quantity supplied.