ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It is most likely yes. Once you lower the price of your product, your product’s quantity demanded will rise until equilibrium is reached. Therefore, surplus drives price down. If the market price is below the equilibrium price, quantity supplied is less than quantity demanded, creating a shortage.

Detailed explanation-2: -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-3: -When there is a surplus, the price falls. Surplus or Excess Supply The quantity supplied exceeds the quantity demanded. Shortage or Excess Demand The quantity demanded exceeds the quantity supplied.

Detailed explanation-4: -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-5: -As the equilibrium price decreases, producer surplus decreases. Shifts in the demand curve are directly related to producer surplus. If demand increases, producer surplus increases.