In a free market setting where quantity supplied is 40 units and quantity demanded is 50 units, price will:
A) rise.
B) fall.
C) remain the same.
D) move in an indeterminate direction.

Question

Quizplus · Accepted Answer

In a free market, when the quantity demanded is higher than the quantity supplied, there is excess demand or a shortage. As a result, buyers will compete for the limited goods available and bids will push the price upward until the market reaches equilibrium. Therefore, in this scenario, the price will rise to balance the market.

In a Free Market Setting Where Quantity Supplied Is 40