ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Above the equilibrium price.
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Below the equilibrium price.
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Either A or B
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None of the above
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Detailed explanation-1: -Just as a price above the equilibrium price will cause a surplus, a price below equilibrium will cause a shortage. A shortage is the amount by which the quantity demanded exceeds the quantity supplied at the current price.
Detailed explanation-2: -Equilibrium is the point where demand for a product equals the quantity supplied. This means that there’s no surplus and no shortage of goods. A shortage occurs when demand exceeds supply – in other words, when the price is too low.
Detailed explanation-3: -Equilibrium: Where Supply and Demand Intersect On a graph, the point where the supply curve (S) and the demand curve (D) intersect is the equilibrium.
Detailed explanation-4: -A surplus exists when the price is above equilibrium, which encourages sellers to lower their prices to eliminate the surplus. A shortage will exist at any price below equilibrium, which leads to the price of the good increasing.