If a price is above equilibrium,
A)A shortage will cause the price to fall and the quantity supplied to decrease.
B)A shortage will cause the price to rise and the quantity supplied to increase.
C)A surplus will cause the price to fall and the quantity supplied to decrease.
D)A surplus will cause the price to fall and the quantity supplied to increase.

Question

Quizplus · Accepted Answer

When a price is above equilibrium, it means that the quantity supplied exceeds the quantity demanded, creating a surplus. This surplus puts downward pressure on the price, leading it to fall. As the price falls, producers are less incentivized to supply as much, leading to a decrease in the quantity supplied.

If a Price Is Above Equilibrium