When Quantity Supplied Exceeds Quantity Demanded at the Current Market

question 220

True/False

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

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Definitions:

Constant Returns to Scale

A situation in which increasing the scale of production inputs results in a proportional increase in the output.

Long-run Average Total Cost

The cost per unit of output incurred when all factors of production, including physical capital, are variable.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-run average total costs.

Constant Returns to Scale

A situation in which the proportionate increase in inputs leads to an equal proportionate increase in outputs, meaning costs and outputs scale equally as production expands.