If a market surplus exists:

Question

Quizplus · Accepted Answer

When a market surplus exists, it means that there is an excess supply of the product that consumers are not demanding at the current price. In order to sell the excess supply, producers will compete among themselves to attract customers by reducing prices. This can lead to a decrease in the market price until it reaches a new equilibrium point, where the quantity demanded equals the quantity supplied. Therefore, option C is the correct answer. Option A is incorrect because setting a government-controlled price may not lead to an efficient allocation of resources or may cause other economic distortions. Option B is incorrect because consumers offering to pay more for a product cannot solve a market surplus problem. Option D is incorrect because the equilibrium price is not always the same as the price ceiling, which is a government-imposed maximum price.

If a Market Surplus Exists