Assume that the equilibrium price for a good is $5. If the market price is $10, a:

Question

Quizplus · Accepted Answer

If the market price is above the equilibrium price, this means that there is a surplus of goods, as suppliers are producing more than what consumers demand at the current price. This surplus will put downward pressure on the price, as suppliers will need to lower the price in order to sell their excess goods. Eventually, the price will decline towards the equilibrium price of $5.

Assume That the Equilibrium Price for a Good Is $5