If the Current Price Is Less Than the Market Clearing

question 192

Multiple Choice

If the current price is less than the market clearing or equilibrium price, we would expect:

• A) a surplus.
• B) downward pressure on price.
• C) upward pressure on price.
• D) no change in the market price.

---

Definitions:

Insolvency

A financial condition where an individual or entity cannot meet their debt obligations as they come due.

Bankruptcy

A federal court procedure to protect a failing firm from its creditors until the best resolution to its problems can be found.

Financial Condition

The status of a company's assets, liabilities, and equity as seen in its balance sheet, reflecting its ability to generate cash flows and remain solvent.

Administrative Expenses

Overhead or general expenses related to the day-to-day operations of a business, including salaries of non-sales personnel, rent, utilities, and office supplies.