Question

At a price of $35, there would be Select one: a. excess demand, and the price would tend to fall from $35 to a lower price. b. a shortage, and the price would tend to rise from $35 to a higher price. c. excess supply, and the price would tend to fall from $35 to a lower price. d. a surplus, and the price would tend to rise from $35 to a higher price.

Answer 1

Answer: c. excess supply, and the price would tend to fall from $35 to a lower price.

Step-by-step explanation:

At $35 there is excess supply because this is a price that most consumers are not willing to pay but most suppliers are willing to sell.

Supply at $35 = 600

Quantity demanded at $35 = 200

This would lead to prices falling as suppliers try to sell the excess supply. The prices would ideally keep falling till the equilibrium price is reached which is $25. At this point, the quantity demanded and supplied will be equal to each other.