a. there is a surplus and the price will fall.
b. there is a surplus and the price will rise.
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 shortage and the price will fall.
1 answer
The correct answer is:
a. there is a surplus and the price will fall.
When the price of a good is above the equilibrium price, it leads to a surplus because the quantity supplied exceeds the quantity demanded. In response to this surplus, prices will typically fall until equilibrium is reached.
