If the current price of Pizzas is above the equilibrium price of Pizzas then

Question

Quizplus · Accepted Answer

If the current price of pizzas is above the equilibrium price, it means that there is a surplus of pizzas in the market as the quantity supplied is more than the quantity demanded. In this situation, sellers of pizzas have an incentive to decrease the price to clear the excess supply and sell more pizzas. If they do not reduce the price, they risk losing sales to their competitors who are selling pizzas at a lower price. Thus, sellers will lower the price until the market reaches the equilibrium price.

If the Current Price of Pizzas Is Above the Equilibrium