If the price in a market is fixed by the government above equilibrium ?
Correct answer: B. There is excess supply
- A. There is excess equilibrium
- B. There is excess supply
- C. There is excess demand
- D. There is equilibrium
Explanation
A government price fixed above equilibrium is a binding price floor. At that higher price, producers want to sell more while consumers want to buy less, creating excess supply.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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