What happens if price falls below the market clearing price?
A) Demand shifts out.
B) Supply shifts in.
C) Quantity demanded decreases, quantity supplied increases, and a surplus results.
D) Quantity demanded increases, quantity supplied decreases, and a shortage results.

Question

Quizplus · Accepted Answer

When the price falls below the market clearing price, the quantity demanded by consumers increases because the goods are cheaper, while the quantity supplied by producers decreases because the lower price makes production less profitable, leading to a shortage.

What Happens If Price Falls Below the Market Clearing Price