Question 18
Price DeterminationIf the government fixed a price of a commodity above the equilibrium price, the quantity supplied will be
- A.less than quantity demanded
- B.equal to the quantity demanded
- C.greater than quantity demanded
- D.equal to zero.
Show the answer and explanation
Answer: C (greater than quantity demanded)
Explanation
A price above equilibrium makes sellers offer more and buyers want less, giving a surplus.