If the market price is above the equilibrium price:Multiple Choicea surplus will result and consumers will bid prices up.a shortage will occur and producers will produce more and lower prices.producers will make extremely high profits.a surplus will occur and producers will produce less and lower prices.
Question
If the market price is above the equilibrium price:Multiple Choicea surplus will result and consumers will bid prices up.a shortage will occur and producers will produce more and lower prices.producers will make extremely high profits.a surplus will occur and producers will produce less and lower prices.
Solution
The correct answer is: a surplus will occur and producers will produce less and lower prices.
Here's why:
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If the market price is above the equilibrium price, it means that the price is higher than what consumers are willing to pay.
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As a result, there will be a surplus of goods because the high price discourages consumers from buying.
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To get rid of the surplus, producers will have to lower the price.
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As they lower the price, they will also produce less to avoid creating another surplus.
So, the process goes like this: high market price leads to surplus -> surplus leads to lower prices -> lower prices lead to less production.
Similar Questions
In a competitive market, if the existing price is below the equilibrium price, market forces will drive the price:Multiple Choiceup and quantity supplied up.down and demand down.up and supply up.up and quantity supplied down.
When demand increases, equilibrium price and quantity increase. As a result, with other things remaining constant, Multiple choice question.consumers benefit because more is available to buy.producers benefit from lower prices.producers do not benefit due to higher production costs.consumers do not benefit due to lower prices.
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.
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.
If a price ceiling is leading to a shortage then: A. the equilibrium price must be above the price ceiling B. supply must be greater than demand C. the equilibrium price must be below the price ceiling D. market forces will restore the price to equilibrium
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