Final answer:
When price is set above equilibrium, it results in a surplus or excess supply in the market.
Step-by-step explanation:
When price is set above equilibrium, it results in a surplus or excess supply in the market.
For example, if the equilibrium price of a product is $5, and the price is set at $8, consumers will be less willing to buy the product because it is relatively more expensive compared to other alternatives in the market. As a result, the quantity demanded will decrease, leading to excess supply.
Excess supply occurs when the quantity supplied exceeds the quantity demanded at a given price. In this case, sellers will be unable to sell all the goods they have produced, and they may need to lower the price to encourage consumers to buy more and decrease the excess supply.