If the price of a good is below the equilibrium price,then
A) the government needs to set a higher price.
B) firms,dissatisfied with growing inventories,will raise the price.
C) consumers,wanting to ensure they acquire the good,will bid the price higher.
D) the government needs to set a lower price.
E) firms,dissatisfied with growing inventories,will lower the price.

Question

Quizplus · Accepted Answer

When the price of a good is below the equilibrium price, demand will exceed supply, resulting in a shortage. In this situation, consumers will want to ensure they acquire the good and will be willing to pay a higher price. This bidding up of the price will continue until it reaches the equilibrium price where the quantity demanded equals the quantity supplied. Therefore, the correct choice is C.

If the Price of a Good Is Below the Equilibrium