Question

If there is a surplus, who will be frustrated by their inability to exchange at the current price, and what will they do as a result?

1) Buyers, increase
2) Buyers, decrease
3) Sellers, increase
4) Sellers, decrease

Answer 1

The correct answer is option 4. In a market surplus, sellers will be frustrated by their inability to sell all their goods, leading them to decrease prices to attract more buyers and restore equilibrium.

Step-by-step explanation:

When there is a surplus in the market, it means that at the current price, the quantity supplied of a good or service exceeds the quantity demanded. This situation will frustrate sellers, as they are unable to sell all of their goods at the existing price.

As a result, sellers are likely to decrease the price to encourage more buyers to purchase their goods, and to reduce their excess inventory. This action helps move the market towards a new equilibrium where quantity demanded matches quantity supplied.