Question

Suppose that the price of corn is above its equilibrium price. You would expect to see:________.
A) a leftward shift of the demand curve because of the high price.
B) an increase in quantity demanded because of the high price
C) a shortage on the market that causes prices to increase further
D) sellers begin to lower their price because of the surplus of corn.

Answer 1

Answer:

D

Explanation:

If the price of corn is above its equilibrium price, corn becomes more expensive to consumers. As a result, they reduce the quantity demanded of corn. there would be a movement along the demand curve for corn and not a shift of the demand curve.

Quantity supplied would also increase as a result of the high price. The fall in quantity demanded coupled with the rise in quantity supplied would lead to a surplus. Due to the surplus, sellers would reduce price until price falls to equilibrium price