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Question
Microeconomics
Posted 9 months ago
Which of the following terms describes a situation in which there is an excess quantity supplied in a market?
Choose 1 answer:
(A) Surplus
(B) Equilibrium
(C) Excess demand
(D) Efficient
(E) Shortage
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Answer from Sia
Posted 9 months ago
Solution
a
Definition of Surplus: A surplus occurs when the quantity supplied of a good exceeds the quantity demanded at a given price
b
Market Dynamics: In a surplus situation, suppliers are unable to sell all their goods at the current price, leading to excess inventory
c
Price Adjustment: To eliminate the surplus, suppliers may lower the price to increase demand and reduce the quantity supplied
Answer
(A) Surplus
Key Concept
Surplus
Explanation
A surplus describes a situation where the quantity supplied exceeds the quantity demanded in a market, leading to excess inventory.
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