Any price below the equilibrium price will lead to
ECONOMICS
WAEC 2012
Any price below the equilibrium price will lead to
- A. increase in supply
- B. excess demand
- C. equality of demand and supply
- D. decreases in demand
Correct Answer: B. excess demand
Explanation
Any price below the equilibrium price will lead to excess demand with decrease in supply. This is so because, people generally buy more of a commodity when the price is low while suppliers will want to supply more when the price is high. Hence, for a price set below equilibrium, suppliers will cut back on producing more of that commodity while demand will be high.
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