If in a competitive market the quantity supplied exceeds the quantity demanded, we expect prices to:
A)stay the same.
B)rise.
C)fall.
D)rise to clear the market.

Question

Quizplus · Accepted Answer

When the quantity supplied exceeds the quantity demanded, there is an excess supply or surplus of the product. To get rid of the surplus, suppliers will lower their prices to encourage more demand while buyers will reduce their demands. This will lead to a decrease in prices (C).

If in a Competitive Market the Quantity Supplied Exceeds the Quantity