In the Case of a Surplus

question 135

Multiple Choice

In the case of a surplus,

• A)there is no market adjustment because buyers can purchase what they want.
• B)the quantity supplied exceeds the quantity demanded at the current price level.
• C)producer incomes will fall and production will rise in order to make up for the shortfall.
• D)market price will rise.
• E)the quantity demanded exceeds the quantity supplied at the current price level.

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Definitions:

Long-Run Equilibrium

A state in market conditions where all firms in a perfectly competitive industry earn zero economic profit, leading to the optimal distribution of resources in that industry.

MR

Stands for Marginal Revenue, which is the additional revenue gained from selling one more unit of a product or service.

MC

Short for Marginal Cost, it refers to the increase in total cost that arises from producing one additional unit of a good or service.

Minimum ATC

The point at which the average total cost of production is at its lowest, indicating the most efficient scale of production.