Suppose the equilibrium price of oranges is $2.00 per pound.If the actual price is above the equilibrium price,a
A) shortage exists and the price falls to restore equilibrium.
B) shortage exists and the price rises to restore equilibrium.
C) surplus exists and the price falls to restore equilibrium.
D) surplus exists and the price rises to restore equilibrium.
E) surplus exists but nothing happens until either the demand or the supply changes.

Question

Quizplus · Accepted Answer

When the actual price is above the equilibrium price, it means that the quantity supplied is greater than the quantity demanded, resulting in a surplus. In order to restore equilibrium, the price must fall to encourage more consumers to buy oranges and reduce the quantity supplied.

Suppose the Equilibrium Price of Oranges Is $2