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

Question

Quizplus · Accepted Answer

If there is excess demand at a government-set price, it means there are more buyers than sellers willing to sell at that price. This indicates that the market is in disequilibrium because the quantity demanded is greater than the quantity supplied. In a free-market equilibrium, the price is adjusted until the quantity demanded equals the quantity supplied. In this case, the government has set a price that does not allow the market to reach equilibrium.

Consider a Market in Which There Is a Government-Set Price