If the quantity demanded for cars is lower than the quantity supplied, we can expect that:
A) the price of cars will increase.
B) the price of cars will decrease.
C) the price of cars will not change.
D) car manufacturers will increase their production of cars.

Question

Quizplus · Accepted Answer

When the quantity demanded for cars is lower than the quantity supplied, there is an excess supply of cars which leads to a surplus. To get rid of this surplus, car sellers will lower the price of cars so that buyers are more incentivized to buy them. Therefore, we can expect that the price of cars will decrease.

If the Quantity Demanded for Cars Is Lower Than the Quantity