If a Surplus Exists in a Market, Then We Know

question 229

Multiple Choice

If a surplus exists in a market, then we know that the actual price is

• A)above the equilibrium price, and quantity supplied is greater than quantity demanded.
• B)above the equilibrium price, and quantity demanded is greater than quantity supplied.
• C)below the equilibrium price, and quantity demanded is greater than quantity supplied.
• D)below the equilibrium price, and quantity supplied is greater than quantity demanded.

---

Definitions:

Inferior Good

A type of good whose demand decreases when consumer income rises, unlike normal goods, which see an increase in demand with rising income.

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income.

Labor-supply Curve

A graphical representation showing the relationship between the wage rate and the quantity of labor workers are willing to supply.

Elasticity Positive

Positive elasticity indicates that when the price of a good or service increases, the quantity demanded increases, or vice versa, showing a direct relationship between price and demand.