If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?
The price of the product will increase to meet equilibrium.
The price of the product will decrease to meet equilibrium.
Supply and demand must be raised.
Supply and demand must be lowered.
Answer (2)
When the quantity supplied exceeds the quantity demanded, a surplus exists.
A surplus puts downward pressure on the price.
To reach equilibrium, the price must decrease.
The price of the product will decrease to meet equilibrium. $\boxed{The price of the product will decrease to meet equilibrium.}
Explanation
Understanding the Problem The question describes a scenario where the quantity supplied is greater than the quantity demanded in a market. We need to determine what happens to the price to reach equilibrium.
Analyzing the Situation When the quantity supplied is greater than the quantity demanded, there is a surplus of the product. In a market, a surplus puts downward pressure on the price.
Determining the Price Adjustment Therefore, to reach equilibrium, the price of the product must decrease. At equilibrium, the quantity supplied equals the quantity demanded.
Final Answer The correct answer is: The price of the product will decrease to meet equilibrium.
Examples
Imagine you're selling lemonade on a hot day. If you make too much lemonade (supply) and not enough people want to buy it (demand), you'll have leftover lemonade. To sell the extra lemonade, you'll likely lower the price to attract more customers. This is similar to how prices adjust in a market to balance supply and demand.
When the quantity supplied exceeds the quantity demanded, a surplus occurs, causing prices to decrease. This price drop encourages more consumers to buy the product, leading to a balance between supply and demand. The price of the product will decrease to meet equilibrium.
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