135k views
4 votes
if the price of a good falls below the equilibrium price demand and supply react to bring to an equilibrium level, This is Called?

1 Answer

7 votes

Final answer:

When the price falls below equilibrium, it leads to excess demand or shortage, and the price starts rising toward equilibrium.

Step-by-step explanation:

When the price of a good falls below the equilibrium price, it leads to excess demand or a shortage. This means that the quantity demanded at the lower price exceeds the quantity supplied at that price.

As a result, eager buyers try to purchase the good, but find a limited supply, leading to a situation where the price starts rising toward the equilibrium level.

User Gyuri Majercsik
by
8.6k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.