When excess demand occurs in an unregulated market, there is a tendency for ?
Correct answer: C. price to rise
- A. price to fall
- B. quantity supplied to decrease.
- C. price to rise
- D. quantity demanded to increase
Explanation
Excess demand means buyers want more than sellers offer at the current price, creating upward pressure on price. A higher price reduces quantity demanded and encourages quantity supplied to increase.
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About Microeconomics
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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