The graph illustrates the market for bottled water. When the price exceeds the equilibrium price, the quantity demanded is ________ the quantity supplied and the price of the good will ________.

Question

Quizplus · Accepted Answer

When the price exceeds the equilibrium price, the quantity demanded decreases while the quantity supplied increases, causing a surplus. To eliminate the surplus, sellers lower the price of the good until the quantity supplied and demanded reach equilibrium again, causing the price to fall. Therefore, the answer is C as the quantity demanded is less than the quantity supplied and the price will fall.

The Graph Illustrates the Market for Bottled Water