If excess demand exists within a market ______. A. the quantity demanded exceeds quantity supplied and...
If excess demand exists within a market ______.
A. the quantity demanded exceeds quantity supplied and the price must decrease to reach the point of market equilibrium B. the quantity supplied exceeds the quantity demanded and price must increase to reach the point of market equilibrium C. the quantity supplied exceeds the quantity demanded and price must decrease to reach the point of market equilibrium D. the quantity demanded exceeds quantity supplied and the price must increase to reach the point of market equilibrium
Homework Answers
D. the quantity demanded exceeds quantity supplied and the price must increase to reach the point of market equilibrium
Explanation :
Demand is downward sloping, and supply is upward sloping.
So when demand exceeds, there is shortage. So quantity demanded is exceeds quantity supplied. It is below equilibrium. So price will increase to reach the market equilibrium.
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