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JAMB Economics 2010 Question 10

Question 10

Price Determination

An excess demand for beans will result from

  1. A.an increase in the price of beans
  2. B.an increase in the supply of beans
  3. C.a decrease in the price of beans
  4. D.a decrease in the supply of beans.
Show the answer and explanation

Answer: C (a decrease in the price of beans)

Explanation

When the price falls below equilibrium, quantity demanded rises and quantity supplied falls, giving excess demand.