Final answer:
The equilibrium price would decrease if there is a surplus of the good because sellers would lower prices to clear the excess inventory.
Step-by-step explanation:
The equilibrium price would decrease in the circumstance of a surplus of the good. Let's go through the options:
- Increase in demand generally causes the equilibrium price to rise, as more consumers are competing to purchase the good.
- Decrease in supply typically leads to an increase in the equilibrium price because there are fewer units of the good available for the same level of demand.
- A surplus of the good indicates that at the current price, supply exceeds demand. Thus, sellers may lower prices to clear the excess inventory, leading to a decrease in the equilibrium price.
- A shortage of the good would result in an increase in the equilibrium price as consumers compete to purchase the limited supply available.
Therefore, the correct answer to which scenario would cause the equilibrium price to decrease is C. a surplus of the good.