What happens to the price of a agricultural product when demand exceeds supply?
AGRICULTURE
JAMB 2023
What happens to the price of a agricultural product when demand exceeds supply?
- A. The price fluctuates randomly
- B. The price decreases
- C. The price remains unchanged
- D. The price increases
Correct Answer: D. The price increases
Explanation
In economics, when demand exceeds supply, it creates a shortage. The price of the product will increase until the quantity demanded is equal to the quantity supplied, a state known as equilibrium. This is because the high demand and low supply create a competitive market where buyers are willing to pay more to secure the product.
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