Explain the changes that will take place in the market when market price of a good is greater than its equilibrium price. Use diagram.

Explanation

It is a situtation of excess supply. In this case, the competition among sellers will increase leading to fall in price of the commodity as sellers have to sell their existing stock. This fall in price will lead to an increase in quantity demanded and a fall in quantity supplied. These effects will take place until a new equilibrium is achieved where quantity demanded equals quantity supplied.