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If there is excess supply at a given pri...

If there is excess supply at a given price, then how will the equilibrium price be reached? Explain by diagram.

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Excess supply is a situation where the quantity supplied of a commodity is more than the qunatity demanded of the commodity. This leads to a competition among sellers leading to a fall in the price. This fall in price causes an increase in quantity demanded and a fall in quantity supplied. A new equilibrium is achieved at a point where quantity demanded equals the quantity supplied.
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If at a given price of the commodity there is excess supply, how will the equilibrium price be reached? Explain with the help of a diagram. OR How will equilibrium price be reached when there is excess supply? Explain with a diagram. OR Explain the series of changes that will take place if market price is higher than equilibrium price. OR At a given price ofa commodity there is excess supply. Is it an equilibrium price? If not, how will the equilibrium price be reached? (use diagram) OR Suppose price of a good is higher than equilibrium price. Explain changes that will establish equilibrium supply.

If at a given price of a commodity, there is excess demand, how will the equilibrium price be reached? Explain by diagram.

Knowledge Check

  • Price floor is ______ the equilibrium price :

    A
    lower than
    B
    higher than
    C
    equal to
    D
    all of these

  • If price is above then equilibrium price , there is :

    A
    excess demand
    B
    excess supply
    C
    price ceiling
    D
    price flooring

    • Similar Questions

    Explore conceptually related problems

    If at a given price of the commodity there is excess demand, how will the equilibrium price be reached4? Explain with the help of a diagram. OR If equilibrium price of a good is grcater than its market price, explain all the changes that will take place in the market. Use diagram. OR Explain the changes that will take place in the market for a commodity if the prevailing market price is less than the equilibrium price.

    How is equilibrium reached if there is excess supply at a price higher than equilibrium price ?

    At a price higher than the equilibrium price, there is an excess demand.

    Explain the chain of effects of excess supply of a good on its equilibrium price.

    Excess supply leads to fall in equilibrium price.

    How will a fall in price of tea affect the equilibrium price of coffee? Explain the chain of effects.

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