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JAMB Economics 2013 Question 18

Question 18

Price Determination

If the price of a commodity is fixed below equilibrium, this will lead to

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

Answer: A (excess demand.)

Explanation

Below equilibrium, buyers want more than sellers offer, so there is excess demand (shortage).