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WAEC Economics 1998 Question 9

Question 9

Price Determination

The equilibrium price of mangoes is N1.00. If the price falls to 50k, there will be

  1. A.an excess demand
  2. B.an excess supply
  3. C.a surplus in the market
  4. D.many sellers in the market
  5. E.no seller in the market
Show the answer and explanation

Answer: A (an excess demand)

Explanation

Below the equilibrium price, buyers want more than sellers offer, so there is excess demand.