Question

in a market with an upward sloping supply curve and a downward sloping demand curve, when there is an excess supply, a. b. c. The actual price must be higher that the equilibrium price. The actual price must be lower that the equilibrium price. The quantity demanded is higher than the equilibrium quantity.

Answer 1

When there is an excess supply in that case the quantity supplied is more than the equilibrium quantity.  

Excess supply With excess supply firms reduce price P1 Q1 Q3 Q2 Excess supply

From the above graph we can see that due to excess supply the quantity demanded is less than the equilibrium quantity.

And the price is greater than the equilibrium price.

A. Is correct.

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