When we say that a price in a competitive market is "too high to clear the market" we usually mean that (given upward-sloping supply curves):
A)no producer can cover his costs of production at that price.
B)the quantity supplied exceeds the quantity demanded at that price.
C)producers are leaving the industry.
D)consumers are willing to buy all the units produced at that price.
E)quantity demanded exceeds quantity supplied at that price.

Question

Quizplus · Accepted Answer

In a competitive market, the equilibrium price is where the quantity demanded equals the quantity supplied. If the price is too high, the quantity supplied would exceed the quantity demanded, creating a surplus. In this case, producers would have to lower their prices to sell their goods, until the market clears at the equilibrium price. Therefore, a price that is "too high to clear the market" implies that the quantity supplied exceeds the quantity demanded at that price.

When We Say That a Price in a Competitive Market