The economy operates according to the law of supply and demand for goods and services. According to this theory, the interaction between supply and demand for a good or service fits and the vector of adjustment is price.
If the price is high, there is more supply than demand. If the price is low, there is more demand than supply. If demand increases, price increases and supply increases. If demand falls, the price falls. That is, the price makes the interaction. There will be a moment where the quantity offered is exactly equal to the quantity demanded, at which point the price practiced is the equilibrium price.
So if an economy is in equilibrium at a time and then the price charged is higher than the equilibrium price, it means that demand has gotten higher than supply.
<u>However, none of the alternatives would explain why a price is charged above the equilibrium price.</u> <u>The answer is the reverse of what is written in alternative (A)</u>. The truth is this: As the quantity demanded rises, the price rises above the equilibrium price. <u>This is the answer</u>.
The alternative (B) is true, although it does not answer the question of the problem. If prices rise, demand falls. This is because the high price discourages consumption.
BTW, I'm an economist and I'm sure.
The question is not complete, here is the complete question followed by the answer;
Aristotle came up with many reasons why statesmen should know all the different types of government. Which of the following is
not
one of Aristotle's reasons?
And the answer is "so that the statesmen can select the government that would maximize their personal power".
Aristotle on statesman that a few people imagine that the capabilities of a statesman, ruler, householder, and master are the same, and that they vary, not in kind, but rather just in the quantity of their subjects. At the point when the legislature is close to home, the ruler is a king; while, as indicated by the standards of the political science, the natives manage and are controlled thus, at that point he is known as a statesman.
Your answer is going to be B
