Question

Which of the following is true about how the "invisible hand" influences economic activity through prices when a product has lower demand than supply?​

a. ​The price must increase, causing less buyers to buy and less sellers to sell.
b. ​The price must increase, causing less buyers to buy and more sellers to sell.
c. ​The price must decrease, causing more buyers to buy and less sellers to sell.

Answer 1

The correct answer is c.

Step-by-step explanation:

Since the point the text is mentioning is above the equilibrium point, we know that the Demand is lower than it should be, while supply is bigger.

In order to increase the demand and lower the supply, we need to decrease the price to the equilibrium price. This will increase the demand and lower the supply making them intersect and reach the equilibrium point, a point that the invisible hand is influencing.

I hope this helps!