ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A Market Surplus occurs when there is excess supply-that is quantity supplied is greater than quantity demanded. In this situation, some producers won’t be able to sell all their goods. This will induce them to lower their price to make their product more appealing.

Detailed explanation-2: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.

Detailed explanation-3: -Consumer surplus always increases as the price of a good falls and decreases as the price of a good rises.

Detailed explanation-4: -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-5: -A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase.