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If the price of a product is above the equilibrium price what is the result?
Wiki User
∙ 8y ago
suppliers produce more than consumers want to purchase and the suppliers end up with surpluses.
Mason Ernser
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When a surplus of a product will arise when price is above equilibrium or below equilibrium?
above equilibrium
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
What is Equilibrium price?
The price of a product when demand equals supply
What happens when the equilibrium price is lower than the market price?
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
There will be a surplus of a product when?
price below the equilibrium level
When a surplus of a product will arise when price is above equilibrium or below equilibrium?
above equilibrium
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
What is Equilibrium price?
The price of a product when demand equals supply
What happens when the equilibrium price is lower than the market price?
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
What happens when the market price is lower than the equilibrium price?
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
When the market price is above equilibrium price the market price will be driven up by?
A
There will be a surplus of a product when?
price below the equilibrium level
When will there be a surplus of a product?
price below the equilibrium level
What happens to consumer surplus if the price is above equilibrium?
When the price is above equilibrium, there is a surplus because supply is greater than demand. The price of the good will naturally decrease back to its equilibrium price where demand and suppy interesect, thus eliminating the surplus.
True or false A price fixed below the equilibrium price of a product will cause a shortage of that product?
true
When market price is above equilibrium price?
When supply and demand are balanced
What is the equilibrium price of a product?
The relationship between price asked and quatity supplied.
