If price is above the equilibrium level, competition amon sellers to reduce the resulting:
a. surplus will increase quantity demanded and decrease quantity supplied.
b. shortage will decrease quantity demanded and increase quantity supplied.
c. surplus will decrease quantity demanded and increase quantity supplied.
d. shortage will in crease quantity demanded and decrease quantity supplied.
2006-10-24 10:59:47 · 2 answers · asked by Steven B 1 in Education & Reference ➔ Primary & Secondary Education
C.
Oh and the price will fall. Bad news for you. Keep your competitors out of the market. Buy em' out. Or Shut them down!
2006-10-24 11:01:56 · answer #1 · answered by Jeff 2 · 0⤊ 0⤋
When Price is above Equilibrium, suppliers will be over-motivated to produce, which results in a Surplus, therefore b. and d. are wrong.
Competition among Sellers means several things they do, but Econ generally focuses on Price, so they will lower their Price to cause Buyers to want more, and the lower Price will reduce the incentive for Sellers to produce. Sellers will not be doing things to decrease demand, they already did that by going above Equilibrium.
a. is correct.
Sorry Jeff, you've misread the question. The question isn't how they got there, it's what they will do next.
2006-10-24 18:05:51 · answer #2 · answered by open4one 7 · 0⤊ 0⤋