In a free market, if the price of a good is below the equilibrium price, then;
A)government needs to set a higher price.
B)suppliers, dissatisfied with growing inventories, will raise the price.
C)demanders, to acquire the good, will bid the price higher.
D)suppliers, dissatisfied with growing inventories, will lower the price.

Question

Quizplus · Accepted Answer

If the price of a good is below the equilibrium price in a free market, demand for the good will exceed the supply available at that price. Therefore, demanders will be willing to offer a higher price to acquire the good, which will lead to an increase in the price until it reaches the equilibrium point where supply and demand are equal. Suppliers are unlikely to lower the price in this situation because they are already dissatisfied with growing inventories, and lowering the price further would only exacerbate the problem. Government intervention to set a higher price would disrupt the free market forces of supply and demand.

In a Free Market, If the Price of a Good