When the market price of a good is above its equilibrium value, and all other determinants are unchanged
A) a shortage will exist in the market.
B) the quantity demanded will be greater than the quantity supplied.
C) the government will regulate the price of the good to ensure equilibrium is attained.
D) a surplus will exist in the market.

Question

Quizplus · Accepted Answer

At equilibrium, the quantity demanded is equal to the quantity supplied. At higher prices, the quantity supplied is greater than the equilibrium quantity, while the quantity demanded is lower than the equilibrium quantity. Thus, a surplus will exist. Of course, this is a temporary situation. The presence of a surplus will put downward pressure on the market price and move it toward the equilibrium price.

When the Market Price of a Good Is Above Its