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Suppose that producers are charging a price that is higher than the equilibrium price. Will this create a surplus or shortage of goods? In two or three sentences, explain your answer.

2 Answers

5 votes
In theory, it should create a surplus. People don't normally pay more for an item than it is worth, however there are always exceptions.
User Ajanth
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This will create a surplus of the product. Because with the price being higher there won't be as many purchases as there would be if there was a cheaper alternative.
User Urho
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