When a surplus of rice occurs,
A) the price of rice rises.
B) the price of rice falls.
C) there is a balance between the forces of supply and demand.
D) the quantity demanded is greater than quantity supplied at the current price.
E) the demand curve shifts rightward and the supply curve shifts leftward to eliminate the surplus.

Question

Quizplus · Accepted Answer

A surplus occurs when there is an excess supply of a particular good, in this case, rice. When there is a surplus, it means that the quantity supplied of rice is greater than the quantity demanded. In order to clear the surplus, suppliers would have to lower the price of rice to entice customers to buy more. Therefore, the price of rice falls when there is a surplus.

When a Surplus of Rice Occurs