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JAMB Economics 2014 Question 15

Question 15

Price Determination

When price is set below equilibrium, this will lead to

  1. A.a decrease in the quantity supplied.
  2. B.a fall in price.
  3. C.an increase in the quantity supplied.
  4. D.a new equilibrium.
Show the answer and explanation

Answer: A (a decrease in the quantity supplied.)

Explanation

At a lower price producers are less willing to sell, so the quantity supplied falls.