When the price of a good is above its equilibrium price, a:
A) surplus puts upward pressure on the price.
B) surplus puts downward pressure on the price.
C) shortage puts upward pressure on the price.
D) shortage puts downward pressure on the price.

Question

Quizplus · Accepted Answer

When the price of a good is above its equilibrium price, it means that suppliers are producing more than consumers are buying. This leads to a surplus, which puts downward pressure on the price as suppliers try to sell off the excess inventory. Therefore, choice B is the correct answer.

When the Price of a Good Is Above Its Equilibrium