If the price of a good is above the equilibrium price ?
Correct answer: E. there is a surplus and the price will fall
- A. there is a surplus and the price will rise
- B. there is a shortage and the price will fall
- C. there is a shortage and the price will rise
- D. The quantity demanded is equal to the quantity supplied and the price remains unchanged
- E. there is a surplus and the price will fall
Explanation
A price above equilibrium causes quantity supplied to exceed quantity demanded, creating a surplus. Sellers respond by reducing the price toward equilibrium.
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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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