Question

When the prevailing price is above the price where supply intersects demand: "price falls because there...

  1. When the prevailing price is above the price where supply intersects demand:

    "price falls because there is a shortage, so producers cut prices to try to attract buyers."

    "price rises because there is a surplus, so buyers bid up the price."

    "price falls because there is a surplus, so producers cut prices to try to attract buyers."

    "price rises because of a shortage, so buyers bid up the price."

Homework Answers

Answer #1

When the prevailing price is above the price where supply intersects demand

"price falls because there is a surplus,so producers cut prices to try to attract buyers

(The price where supply intersects demand is called the equilibrium price,where demand = supply,if the prevailing price is above the equilibrium price,it indicates that demand is less than supply,which means that there is a surplus,in such a situation the producers cut their prices,so as to attract buyers to buy their products and increase their sales)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When there is a decrease in supply, all else held equal, equilibrium price falls, demand increases,...
When there is a decrease in supply, all else held equal, equilibrium price falls, demand increases, and equilibrium quantity increases. equilibrium price falls, demand does not change, and equilibrium quantity increases. equilibrium price rises, quantity demanded decreases, and equilibrium quantity decreases. equilibrium price falls, quantity demanded decreases, and equilibrium quantity decreases. equilibrium price rises, demand does not change, and equilibrium quantity increases.
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve...
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. there is a __________ at that price and the current price must be __________ the equilibrium price. A-Shortage, above B-Shortage, below C-Surplus, above D-Surplus, below
1. When demand is less elastic (more inelastic) than supply, the tax burden falls primarily on...
1. When demand is less elastic (more inelastic) than supply, the tax burden falls primarily on consumers, why 2. When demand is more elastic than supply, as shown in, the tax burden falls primarily on producers. What is the reason that products such as alcohol, cigarettes, and gasoline are taxed so heavily? Support your answer by above mentioned facts
When demand for Canada’s exports falls: a. supply of the Canadian dollar in the foreign exchange...
When demand for Canada’s exports falls: a. supply of the Canadian dollar in the foreign exchange market rises. b. the U.S. federal government will always respond by increasing U.S. tax rates. c. the U.S. federal government will always respond by increasing U.S. exports. d. Canadian producers will sell more goods to foreigners. e. demand of the Canadian dollar in the foreign exchange market falls.
1. All other things equal, according to the law of demand, when the price of a...
1. All other things equal, according to the law of demand, when the price of a good falls, ________. the demand for the good falls the demand for the good rises the quantity demanded of the good falls the quantity demanded of the good rises 2. When a market is in equilibrium, the quantity of the good that buyers are willing and able to buy ________. exactly equals the quantity that sellers are willing and able to sell cannot be...
[5] One reason buyers demand less of a product as its price increases is: A) substitute...
[5] One reason buyers demand less of a product as its price increases is: A) substitute goods are usually available. B) high-priced goods place buyers in higher tax brackets. C) buyers must save more of their incomes as prices increase. D) sellers offer less of the product for sale as its price increases. [6] Which of the following explains why consumers purchase less of a good or service when its price increases? A) A limited income from which purchases can...
The demand and supply equations for the Wheat market are: Demand: P = 200-4q Supply: P...
The demand and supply equations for the Wheat market are: Demand: P = 200-4q Supply: P = - 50 + Q Where P = price per bushel, and Q = quantity 1. Calculate the equilibrium price and quantity. (1.5 Marks) 2. Suppose the government guaranteed producers a price floor of AED 90 per bushel. Estimate the effect on the quantity supplied and demanded. (1.5 Marks) 3. Would the price floor affect the Market outcome? (Calculate the surplus or shortage )....
Economic surplus is demand price less equilibrium price supply price above market price consumer's surplus plus...
Economic surplus is demand price less equilibrium price supply price above market price consumer's surplus plus producer's surplus none of the above
A ________ consumer surplus is measured by subtracting price from the willingness to pay for a...
A ________ consumer surplus is measured by subtracting price from the willingness to pay for a good. The market consumer surplus is measured by an area under the ________ curve and above the price up to the relevant quantity. a. Market: Supply b. Individual: Demand c. Market: Demand d. Individual: Supply With a price ceiling, there is a transfer of surplus from producers to _________ and there may be a potential ______ market due to shortage in the market. a....
7. When a minimum-wage law forces the wage to remain above the level that balances supply...
7. When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a a. shortage of labor and a shortage of jobs. b. shortage of labor and a surplus of jobs. c. surplus of labor and a shortage of jobs. d. surplus of labor and a surplus of jobs. 8. The introduction of a union into an industry a. raises wages and employment in that industry. b. lowers wages and employment...