If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall untilGroup of answer choicesthe quantity demanded exceeds the quantity supplied. The market will then be in equilibrium.quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price.all consumers will be able to afford the product.quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
Question
If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall untilGroup of answer choicesthe quantity demanded exceeds the quantity supplied. The market will then be in equilibrium.quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price.all consumers will be able to afford the product.quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
Solution
The correct answer is: "quantity demanded equals quantity supplied. The market price will then equal the equilibrium price."
Here's why:
-
When the quantity supplied exceeds the quantity demanded, it means there is a surplus of the product in the market. This surplus creates downward pressure on the price.
-
As the price falls, the product becomes more attractive to buyers, which increases the quantity demanded. At the same time, suppliers may reduce the quantity they supply because the lower price makes production less profitable.
-
This process continues until the quantity demanded equals the quantity supplied. At this point, the market is in equilibrium, and the market price equals the equilibrium price.
This is a fundamental principle of supply and demand in economics.
Similar Questions
Equilibrium occurs:Question 3Select one:a.at the lowest price consumers are willing to pay.b.at any price for which quantity demand is equal to quantity supply.c.at any price for which quantity demanded is less than the quantity supplied.d.at any price for which quantity demanded is greater than the quantity supplied.e.at the highest price consumers are willing to pay.
If price is above the equilibrium level, competition among sellers to reduce the resulting:Multiple Choicesurplus will decrease quantity demanded and increase quantity supplied.shortage will increase quantity demanded and decrease quantity supplied.shortage will decrease quantity demanded and increase quantity supplied.surplus will increase quantity demanded and decrease quantity supplied.
The law of supply and demand states that:Group of answer choicesQuantity demanded increases as price decreases and quantity supplied increases as price increasesIn the absence of market frictions, that the market price will adjust so that demand equals supplyIn the absence of market frictions, the market price will adjust so that the elasticity of demand equals the elasticity of supplyThe market will always be in equilibrium
What happens to the market equilibrium if supply decreases and demand increases? The equilibrium price will increase and the quantity will decrease The equilibrium price will decrease and the quantity will increase The equilibrium price and quantity will both increase The equilibrium price and quantity will both decrease
If the demand for a product increases, then we would expect equilibrium priceGroup of answer choicesto increase and equilibrium quantity to decrease.to decrease and equilibrium quantity to increase.and equilibrium quantity both to increase.and equilibrium quantity both to decrease.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.