The quantity demanded of good X in a market is 400 units. The quantity of X supplied to the market is 800 units. The market price is $4. Which of the following statements are likely to be true?

Question

Quizplus · Accepted Answer

Given that the quantity supplied (800 units) is greater than the quantity demanded (400 units), there is a surplus in the market. For the market to reach equilibrium, where quantity supplied equals quantity demanded, the price needs to fall. This would encourage more demand and less supply until equilibrium is reached.

The Quantity Demanded of Good X in a Market Is