Question

In: Economics

If there is excess demand in a market, we can expect that: A) prices will fall...

If there is excess demand in a market, we can expect that:

A) prices will fall because some suppliers will find it in their interest to lower prices.

B) prices will rise because some suppliers will find it in their interest to raise prices.

C) the demand curve will shift to the left to restore equilibrium.

D) the demand curve will shift to the right to restore equilibrium

Solutions

Expert Solution

"B"

when there is excess demand in the market, there will be a shortage and an upward pressure in the price. the suppliers will increase the price and the supply will also increase. this will continue to the point where the demand and the supply are equal


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