Question

15.

If price increases above the equilibrium,

Group of answer choices

a surplus will develop.

a shortage will develop.

supply will shift.

demand will decrease.

16.

If a surplus develops in a market,

Group of answer choices

price will fall to equilibrium.

price will increase to equilibrium

supply will shift.

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Answer 1

15. Option A.

• Price's usually rise above the equilibrium when the government sets a price floor.
• This will create a surplus within the market as the quantity supplied exceeds the quantity demanded when the price rises above the equilibrium.

16. Option A.

• When surplus develops in a market, then the firms will try to decrease the price in order to earn more profits.
• This is because when there is a market surplus, the quantity supplied exceeds the quantity demanded.
• Hence if a surplus develops in a market, price will fall to equilibrium.