What is true if the price of a good is above the equilibrium price? - ProProfs Discuss
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What is true if the price of a good is above the equilibrium price?



A. There is a surplus and the price will rise
B. There is a surplus and the price will fall
C. There is a shortage and the price will rise
D. There is a shortage and the price will fall
E. The quantity demanded is equal to the quantity supplied and the price remains unchanged

This question is part of Microeconomics [Ch.
Asked by Emy_, Last updated: Feb 17, 2020

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2 Answers

W. Wright

Let's see how far my knowledge stretches

W. Wright, Biology student, Biology student, Astoria

Answered Apr 10, 2019

The correct answer here is answer B: there is a surplus and the price will fall. This is simply a matter of understanding how the equilibrium chart for supply and demand works (or a supply and demand curve, for those who haven’t taken higher economics classes). The supply of a good goes up as demand goes down, and the demand for a good goes up as the supply goes down.

The place where the two lines intersect on a graph is the equilibrium price: the point at which a customer is most happy to pay for the supply which is on hand.
If the price is too high, there’s going to be a surplus and price will fall in the

 

John Smith

John Smith

Answered Feb 02, 2017

There is a surplus and the price will fall
 

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