Question

At $5 a bushel, there is an excess supply of wheat. is this price above or below the equilibrium price? in 2-3 sentences, explain your answer.

Answer 1

Its above the equilibrium price. Excess supply means they produced more than what people are demanding. So the bushel might be expensive for them and less people are buying it.

Answer 2

This price is above the equilibrium price due to the fact that when Supply increases the production costs decreases in other words it can be because the price floor whitch is a price that is set above the equilibrium price it is not allowed to decrease and eventually causes a surplus in products.