Final answer:
The likely result when the market price is above equilibrium is a surplus, due to an excess of supply over demand at higher prices. Conversely, when the price is below equilibrium, there would be a shortage, where demand exceeds supply.The correct answer is option A.
Step-by-step explanation:
When the price in a market is above equilibrium, the likely result is a surplus. At a high price, the quantity supplied by producers increases because they can get more for their products, which encourages them to offer more for sale. However, the higher price also decreases the quantity demanded by consumers because the product is more expensive than they are willing or able to pay.
The result is that the quantity supplied exceeds the quantity demanded, which is what we call a surplus.If the price were below equilibrium, we would predict a shortage. This is because at a lower price, more consumers are able to afford the product, thus the quantity demanded rises.
At the same time, producers are less inclined to supply the product because the lower price may not cover their costs, leading to a decrease in the quantity supplied. Consequently, there is more demand than there is supply available, resulting in a shortage.The correct answer is option A.