What happens when the price of a product is set below its equilibrium level?

Show Answers

A shortage occurs, causing the price to increaseThe amount demanded equals the amount supplied, so the price stays the sameA shortage occurs, leading to a decrease in priceA surplus exists, which results in a price increase

Explanation

When the price is below the equilibrium point, demand exceeds supply, creating a shortage that drives the price upward until balance is restored.