Price Determination.

Question 1

WHAT happens when there are higher prices, and there’s more quantity being supplied than being demanded which creates…

Answer 1

Excess supply / surplus

Question 2

To eliminate excess supply or surplus producers

Answer 2

Decrease their prices until it reaches the equilibrium price where the quantity supplied equals the quantity demanded.

Question 3

What happens when there is excess demand or a shortage

Answer 3

Producers will increase their prices meaning that it costs more for consumers to buy their goods.

Question 4

What happens when the price is above equilibrium price

Answer 4

There is excess supply

Question 5

What happens when there is excess supply or surplus

Answer 5

Producers will drop their prices to eliminate the excess supply.

Question 6

When price is below the equilibrium there is

Answer 6

Excess demand , shortage

Question 7

If there is excess demand or shortage

Answer 7

Producers will increase their prices as the consumers will bid up their prices in order to get the same good.