In a competitive market,when price is below the equilibrium level,the price will be driven upward due to
A) excess supply
B) government intervention
C) competition among suppliers
D) excess demand
E) technical inefficiency

Question

Quizplus · Accepted Answer

When the price is below the equilibrium level, there is excess demand in the market, meaning that the quantity demanded by consumers is greater than the quantity supplied by producers. As a result, suppliers can increase the price in order to take advantage of the excess demand and earn more profits. This process leads to an increase in price until it reaches the equilibrium level, where supply and demand are balanced. Therefore, the correct answer is D, excess demand.

In a Competitive Market,when Price Is Below the Equilibrium Level,the