If the price of a good is higher than the equilibrium price

Question

Quizplus · Accepted Answer

If the price of a good is higher than the equilibrium price, it means that there is a surplus of the good and the quantity supplied exceeds the quantity demanded. This results in a decrease in consumer surplus as consumers are not willing to pay the higher price for the excess quantity available. Additionally, there is an increase in deadweight loss as resources are not allocated efficiently. Finally, producer surplus is also decreased as sellers are unable to sell all the goods at the higher price, resulting in a loss of revenue.

If the Price of a Good Is Higher Than the Equilibrium