If the quantity demanded of a good is greater than the quantity supplied of the good at the current price,then
A)Price will increase until it reaches the equilibrium price.
B)The demand curve will shift to the left to create equilibrium.
C)The supply curve will shift to the right to create equilibrium.
D)There is a surplus of the good.

Question

Quizplus · Accepted Answer

When the quantity demanded is greater than the quantity supplied, there is excess demand or a shortage of the good. This leads to competition amongst buyers, which drives up the price of the good in question. As prices rise, suppliers are incentivized to increase production to take advantage of the higher prices. This will continue until the point where quantity demanded equals quantity supplied, which is the equilibrium price. Therefore, the price will increase until it reaches the equilibrium price.

If the Quantity Demanded of a Good Is Greater Than