At the current market price for milk, the quantity of milk that sellers are willing and able to sell falls short of the quantity that buyers are willing and able to purchase. What is occurring in this situation?

Question

Quizplus · Accepted Answer

When the quantity of milk that sellers are willing and able to sell falls short of the quantity that buyers are willing and able to purchase, this implies that the current market price is lower than the equilibrium price. This situation creates excess demand, causing buyers to bid up the price to reach the equilibrium price point where supply and demand are balanced. Therefore, the current market price must be less than the equilibrium price of milk.

At the Current Market Price for Milk, the Quantity of Milk