If in a competitive market the quantity supplied exceeds the quantity demanded,we expect prices to:
A)stay the same.
B)rise.
C)fall.
D)rise first,then fall when demand decreases.

Question

Quizplus · Accepted Answer

When the quantity supplied exceeds the quantity demanded, a surplus occurs which leads to a decrease in price in order to encourage more demand and reduce the excess supply. Therefore, we expect prices to fall.

If in a Competitive Market the Quantity Supplied Exceeds the Quantity