In free and competitive markets,surpluses are eliminated by
A)government price controls.
B)government purchases.
C)black markets.
D)price increases.
E)price decreases.

Question

Quizplus · Accepted Answer

In free and competitive markets, surpluses occur when the quantity supplied exceeds the quantity demanded at the current price. To eliminate this surplus, producers must decrease their price to attract more buyers, which will increase demand and reduce the surplus. Therefore, the correct answer is price decreases (choice E). Government price controls (choice A) and purchases (choice B) can also be used to eliminate surpluses, but these actions are not part of free and competitive markets. Black markets (choice C) exist outside of legal markets and do not necessarily eliminate surpluses. Price increases (choice D) would exacerbate the surplus by reducing demand and increasing supply.

In Free and Competitive Markets,surpluses Are Eliminated by