Question

If a price ceiling is set above the equilibrium price in a market rev____________.a. rationing will be necessary. b. surpluses of the commodity will develop.c. the quantity demanded will exceed the quantity supplied.d. the quantity supplied will equal the quantity demanded.

Answer 1

Answer:

b. surpluses of the commodity will develop.

Explanation:

The equilibrium price is the intersection of the demand and supply curve. At this price, the quantity demanded matches the quantity supplied. There are surplus or shortages in the market.

When the price is set above the equilibrium point, it means the product or service will be too expensive for many buyers to afford. A high price results in reduced demand.  If supply is constant, and the demand has declined, the market will experience a surplus of that commodity.  Should the price go below the equilibrium point, there would be an increase in demand, causing a shortage of that product.