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WAEC Economics 2012 Question 11

Question 11

Price Determination

Any price below the equilibrium price will lead to

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

Answer: B (excess demand.)

Explanation

Below equilibrium, quantity demanded exceeds quantity supplied: excess demand (shortage).