What Is Likely to Happen If a Producer Incorrectly Sets

question 170

Multiple Choice

What is likely to happen if a producer incorrectly sets the price of its product too high?

• A) A shortage (excess demand) will result, and consumers will bid the price down to equilibrium.
• B) A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to lower the price.
• C) A shortage (excess demand) will result, and consumers will bid the price up to equilibrium.
• D) A surplus (excess supply) will result, and the additional goods in inventory will prompt the producer to restrict output until sales increase.

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Definitions:

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