ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Excess supply means the producers will make less of the good
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QD will exceed QS, so price will drop
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QS will exceed QD, so price will drop
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Undersupply means that the good will become more expensive
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Detailed explanation-1: -The quantity demand exceeds the quantity supplied, leading to a shortage and increase in prices. This would cause an upward movement along the supply curve. Hence, both equilibrium price and quantity increase.
Detailed explanation-2: -Economists call this an “excess demand” – the quantity demanded is greater than the quantity supplied at the given price. This is also called a shortage. Now, sellers don’t like the idea of $1.00 per week at all. They’d go out of business at that price!
Detailed explanation-3: -An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
Detailed explanation-4: -The law of supply states that a higher price leads to a higher quantity supplied and that a lower price leads to a lower quantity supplied. Supply curves and supply schedules are tools used to summarize the relationship between supply and price.
Detailed explanation-5: -Surplus and shortage: If the market price is above the equilibrium price, quantity supplied is greater than quantity demanded, creating a surplus. Market price will fall.