What can be said about the market price when a good is in surplus (i.e., when the quantity supplied exceeds the quantity demanded)? How will demanders and suppliers respond to a surplus, and what will happen to the market price?

What will be an ideal response?


When there is a surplus, the market price must be higher than the equilibrium price. Demanders will be satisfied in this situation, but suppliers will not. Competition among suppliers will cause the market price to be bid down until it reaches the equilibrium price.

Economics

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