ECONOMICS
PRICE CEILINGS AND FLOORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand; increase
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demand; decrease
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supply; increase
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supply; decrease
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Detailed explanation-1: -Answer and Explanation: If the current price in the market was above the equilibrium price, quantity supplied will DECREASE in the future. If the current market price is above the equilibrium price, then the current quantity supplied will be higher than the current quantity demanded.
Detailed explanation-2: -If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level.
Detailed explanation-3: -A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
Detailed explanation-4: -Excess supply is a market condition when the quantity supplied is greater than the demand for a commodity at the prevailing market price. It occurs at a price greater than the equilibrium price level.