If producers incorrectly set the price of their product too high:

Question

Quizplus · Accepted Answer

If producers set prices too high, there will be a surplus of goods in the market, which means that there will be excess inventory. To avoid this, producers will have to lower their prices to sell their goods, which will bring the market to equilibrium. Therefore, option B is correct. Option A is incorrect because in a shortage, consumers bid the price up to equilibrium, not down. Option C is also incorrect for the same reason. Option D is incorrect because producers will not restrict output until sales increase but rather reduce prices to sell their excess inventory.

If Producers Incorrectly Set the Price of Their Product Too