Suppose the market price of lettuce is currently $1.00 per head. The equilibrium price is $1.50. We would expect:

Question

Quizplus · Accepted Answer

If the current market price of lettuce is below the equilibrium price, which is the case here ($1.00 < $1.50), there will be excess demand for lettuce. Consumers will demand more lettuce at the lower price, and producers will not be willing to supply as much at that price. This will eventually lead to a shortage of lettuce and an increase in the price towards the equilibrium level of $1.50.

Suppose the Market Price of Lettuce Is Currently $1