In a free market, if the price of a good is above the equilibrium price, then;

A. suppliers, dissatisfied with growing inventories, will raise the price.

B. demanders, wanting to ensure they acquire the good, will bid the price lower.

C. government needs to set a lower price.

D. suppliers, dissatisfied with growing inventories, will lower the price.

Question

Business

Serena Brennan

27 November, 05:01

In a free market, if the price of a good is above the equilibrium price, then;

A. suppliers, dissatisfied with growing inventories, will raise the price.

B. demanders, wanting to ensure they acquire the good, will bid the price lower.

C. government needs to set a lower price.

D. suppliers, dissatisfied with growing inventories, will lower the price.

+1

Answers (1)

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Kibbles · Answer 1

Answer: (B) demanders, wanting to ensure they acquire the good, will bid the price lower.

Explanation:

In the free market, if the product price are above the equilibrium price then, the demand of the product rise and the demanders ensure that they acquire good quality products in the low price. Then, the quality and quantity both demand increases until the equilibrium are reached.

On the other hand, if the quantity of the product demand is less as compared to the quantity supply then it create shortage of the product.

Therefore, Option (B) is correct.