Consider a market in which there is an administered price.If there is excess demand,
A)there are unsuccessful sellers.
B)none of the product will be exchanged.
C)the market is in its free- market equilibrium.
D)the product has not reached the point of saturation.
E)the market is in disequilibrium.

Question

Quizplus · Accepted Answer

If there is excess demand in a market with an administered price, it means that the quantity demanded is greater than the quantity supplied at the given price. This is a clear indication of market disequilibrium. The price is not allowed to rise to reach a new equilibrium point and clear the excess demand. As a result, some potential buyers will be unable to purchase the product, while some sellers will be unable to find buyers for their products.

Consider a Market in Which There Is an Administered Price