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A surplus occurs when a. the quantity demanded exceeds the quantity supplied. b. price is below the equilibrium price. c. price is at the equilibrium. d. price is above the equilibrium.
Economics For Today
Solutions
Economics For Today
A surplus occurs when
- a. the quantity demanded exceeds the quantity supplied.
- b. price is below the equilibrium price.
- c. price is at the equilibrium.
- d. price is above the equilibrium.
The occurrence of the surplus in the economy.
Explanation of Solution
The demand curve is the individual demand for the commodity at various prices. Similarly, the total demand curve is the summation of all the individual demand curves of the economy. The surplus is the excess supply in the economy.
Option (d):
When the price level in the economy is higher than the market equilibrium price level, it means that the consumers have to pay above the equilibrium price to consume the commodity. This decreases the demand for the commodity and as a result, the demand would fall below the supply and creates a surplus inventory stock in the market. This means that option ’d’ is correct.
Option (a):
When the quantity demanded of a commodity exceeds the quantity supplied of the economy, it means that there is not enough supply to meet the economic demand of the society...
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