In a competitive market,excess demand for a good exists whenever
A) the current price is below the equilibrium price
B) resources are scarce
C) the quantity supplied at the current price exceeds the quantity demanded
D) sellers are subject to the constraints imposed by input prices and technology
E) the current price is above the equilibrium price

Question

Quizplus · Accepted Answer

Excess demand for a good exists whenever the current price is below the equilibrium price. This means that at the current low price, the quantity demanded of the good is greater than the quantity supplied, creating a shortage in the market. As a result, buyers may be willing to pay more for the good, and sellers may increase their prices to reach the equilibrium price where the quantity demanded equals the quantity supplied.

In a Competitive Market,excess Demand for a Good Exists Whenever