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

Question

Quizplus · Accepted Answer

If the price of a good is above the equilibrium price, then suppliers will be producing more of the good than demanders are willing to buy, causing a surplus to build up. To get rid of the surplus, suppliers will need to lower the price to entice more buyers to purchase the good. This will continue until the price reaches the equilibrium price, at which point the quantity supplied and quantity demanded will be equal. Therefore, D is the correct choice.

In a Free Market, If the Price of a Good