Question

When the price is ________ the equilibrium price, we would expect there to be a ________, causing the market to put ________ pressure on the price until it went back to the equilibrium price.

Answer 1

Answer:

E. above; surplus; downward

Explanation:

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When price is above equilibrium price, the quantity supplied exceeds quantity demanded. This leads to a surplus. This places a downward pressure on price. Price falls until equilibrium price is restored.

When price is below equilibrium price, the price of goods become cheaper. The quantity demanded increases while the quantity supplied falls. This leads to a shortage and places an upward pressure on price. Price rise until equilibrium price is reached .

I hope my answer helps you.