When excess supply occurs in a free market, market forces will result in

Question

Quizplus · Accepted Answer

When excess supply occurs, market forces lead to a decrease in prices to clear the surplus. This price reduction makes the product more attractive, leading to an increase in quantity demanded (B) and a decrease in quantity supplied (A), as suppliers adjust to the new market equilibrium. Thus, all of the options (A, B, C) are correct outcomes of excess supply being corrected by market forces, making E the correct choice.

When Excess Supply Occurs in a Free Market, Market Forces