If the price of a good is initially below the equilibrium level
A)the supply curve will shift leftward.
B)the supply curve will shift rightward.
C)firms supply none of the good.
D)excess demand exists.

Question

Quizplus · Accepted Answer

If the price of a good is initially below the equilibrium level, this means that the quantity demanded of the good will be greater than the quantity supplied, which results in excess demand. Therefore, the correct choice is D - excess demand exists. Neither the supply curve nor the firm's supply will necessarily shift in this scenario.

If the Price of a Good Is Initially Below the Equilibrium