Question 7
Price DeterminationWhen the price of a commodity is below the equilibrium price the quantity demanded will exceed the quantity supplied. Such a situation is referred to as
- A.elastic supply
- B.joint demand
- C.excess supply
- D.derived demand
- E.none of the above.
Show the answer and explanation
Answer: E (none of the above.)
Explanation
When demand exceeds supply the situation is excess demand (a shortage), which is not among options A to D.