ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a surplus, when quantity demanded is lower than quantity supplied
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a surplus, when quantity supplied is lower than quantity demanded
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a shortage, when quantity demanded is lower than quantity supplied
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a shortage, when quantity supplied is lower than quantity demanded
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Detailed explanation-1: -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.
Detailed explanation-2: -A surplus occurs when there is some sort of disconnect between supply and demand for a product, or when some people are willing to pay more for a product than others.
Detailed explanation-3: -A surplus occurs when the price is too high, and demand decreases, even though the supply is available. Consumers may start to use less of the product, or purchase substitute products that are more affordable. To eliminate the surplus, suppliers reduce their prices and consumers start buying again.
Detailed explanation-4: -The two causes of disequilibrium occurring in a market are: Shortages: when quantity demanded exceeds quantity supplied. Surpluses: when quantity supplied exceeds quantity demanded.