When quantity demanded of a good exceeds the quantity supplied at the prevailing market price,_____.

Question

Quizplus · Accepted Answer

If the quantity demanded of a good exceeds the quantity supplied at the prevailing market price, it means there is excess demand or a shortage. This shortage indicates that consumers are willing to pay more to acquire the good, creating upward pressure on the price. As a result, the price of the good will tend to increase until the market reaches a new equilibrium point where the quantity supplied equals the quantity demanded.

When Quantity Demanded of a Good Exceeds the Quantity Supplied