Question

When there is excess supply (surplus) what will happen?

Answer 1

A Market Surplus occurs when there is excess supply- that is quantity supplied is greater than quantity demanded. In this situation, some producers won't be able to sell all their goods. This will induce them to lower their price to make their product more appealing.

Answer 2

If there is excess supply, then the price will fall.

Step-by-step explanation:

More supply would reduce the demand and hence, price would adjust to meet the equilibrium between demand and supply