Imagine a free market in which at a price of $10, quantity supplied is 50 units and quantity demanded is 40 units. Equilibrium price in this market:
A) is equal to $10.
B) is less than $10.
C) is greater than $10.
D) differs from $10 in an indeterminate direction.

Question

Quizplus · Accepted Answer

In a free market, if the quantity supplied exceeds the quantity demanded at a given price, there is a surplus, which typically leads to a decrease in price until equilibrium is reached. Therefore, the equilibrium price is less than $10.

Imagine a Free Market in Which at a Price of $10