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Surplus means there will be excess supply, meaning demand will fall, and so will prices

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16y ago

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Market clearing price?

The price that exists when a market is clear of shortage and surplus, or is in equilibrium.


What happens to prices when there is a surplus?

the price goes down


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.


What happens to price when a shortage exists?

Consumers bid up the price.


As price falls along a particular demand curve what happens to consumer surplus?

it always increases


Why is there consumer surplus in the market?

Consumer surplus exists in the market because consumers are willing to pay more for a product than the actual price they pay. This difference between what consumers are willing to pay and what they actually pay creates a surplus value for consumers.


What happens When the government intervenes in the market by imposing price ceilings and price floors?

Shortages, Surplus and Unintended consequences.


Suppose the price of corn is 3.25 per bushel. is there a shortage or surplus of corn at that price?

there is a surplus


What is causes a surplus price ceiling or price floor?

A price floor can cause a surplus while a price ceiling can cause a shortage but not always.


Why does consumer surplus exist in a market for a good?

Consumer surplus exists in a market for a good because consumers are willing to pay more for a product than the actual price they end up paying. This difference between what consumers are willing to pay and what they actually pay creates a surplus value for consumers.


Which causes the price of grain from the plains to fall?

A surplus in crops


What happens to surplus when revenue increases?

the customer surplus increase