When There Is Excess Supply of a Product in a Market

question 60

Multiple Choice

When there is excess supply of a product in a market,

• A) price will tend to rise.
• B) price must be above the equilibrium price.
• C) producers will expand output and sales will rise.
• D) price must be below the equilibrium price.

---

Definitions:

Price Rationing

A method of allocating goods among buyers by charging a high enough price to decrease demand to match the supply.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, leading to market balance.

Total Revenue

The total amount of money a firm receives from selling its goods or services.

Hotel Rooms

Accommodation units provided by hotels for temporary occupancy by guests, varying in size, quality, and amenities offered.