If the market price is above the equilibrium price, ______.

Question

Quizplus · Accepted Answer

If the market price is above the equilibrium price, this means that there is a surplus of the product, as suppliers are producing more than consumers are willing to buy. As a result, prices and production will fall until the market reaches a new equilibrium point. Option A is incorrect because while producers may initially earn large profits, this will not be sustainable in the long run because the surplus will eventually drive prices down. Option B is incorrect because consumer strikes typically occur in response to factors such as poor working conditions or product quality, not simply high prices. Option C is also incorrect because a shift in the demand curve would only occur if consumer preferences or other external factors changed, which is not necessarily the case if the market price is above the equilibrium price.

If the Market Price Is Above the Equilibrium Price, ______