If price is initially above the equilibrium level,
A) the supply curve will shift rightward.
B) the supply curve will shift leftward.
C) excess supply exists.
D) all firms can sell as much as they want.

Question

Quizplus · Accepted Answer

If the price is initially above the equilibrium level, it means that there is excess supply in the market. This is because at the higher price level, suppliers are willing and able to supply more than consumers are willing and able to buy. This leads to a surplus of goods in the market, which puts downward pressure on prices until the market reaches a new equilibrium. Therefore, choice C is the correct answer.

If Price Is Initially Above the Equilibrium Level