Question

Suppose the current price of a pound of steak is​ $6 per pound and the equilibrium price is​ $9 per pound. What takes​ place?

A.

There is a​ shortage, so the price rises and quantity demanded decreases.
B.
There is a​ surplus, so the price falls and quantity demanded increases.
C.
There is a​ shortage, so the price falls and quantity demanded decreases.
D.
There is a​ shortage, so the price falls and quantity demanded increases.
E.
There is a​ shortage, so the price rises and quantity demanded increases.

Answer 1

Ans. B.There is a surplus,so the price falls and the quantity demanded increases.

Equilibrium price means the price at which the quantity demanded of a commodity equals the quantity supplied.At equilibrium all the three, the price, demand and supply are in equilibrium.But when there happens an excess supply it can make a fall in price. Here the equilibrium price is $9.And the current price is $6. which is less than the equilibrium price When the price falls.the buyers will buy more which is natural.

Thus there is surplus.So the price falls,from $9 to $6.

Since the price is less quantity demanded increases.