Question

When the price is _________ the equilibrium price, we would expect there to be a _________, causing the market to put _________ pressure on the price until it went back to the equilibrium price.

Answer 1

above; surplus; downward

Step-by-step explanation:

• When the price is higher than the equilibrium price, the quantity supplied exceeds the quantity demanded. This leads to surplus. This reduces the pressure on the price. The price will drop until the equilibrium price is restored.
• When the price is lower than the equilibrium price, the cost of goods becomes cheaper. Demand increases, volume of supply drops. This reduces and increases the pressure on the price. Price increases until the equilibrium price arrives