What happens when the market price falls below the equilibrium price?

Multiple choice question for Market. Select an option, then review the explanation below.

Show Answers

The quantity demanded exceeds the quantity suppliedThe quantity demanded is lower than the quantity suppliedDemand is smaller than supplyThe quantity demanded matches the quantity supplied

Explanation

When the price is set below the equilibrium level, consumers want to buy more than producers are willing to supply, resulting in quantity demanded being greater than quantity supplied.

Practice related questions from the same subject.

1.Broadcasting firms use satellite TV subscriptions and signal detection tools primarily to combat which issue?
2.Which of the following is a classic example of a public good?
3.Which of the following factors can lead to market failure?
4.When a neighbor burns yard debris and smoke enters your home, what type of externality does this represent?
5.Why is a competitive equilibrium considered Pareto efficient?

What happens when the market price falls below the equilibrium price?

Explanation

More Market MCQs