Figure 4-8 50 price 45 40 35 30 25 20 15 10 5 S D 100 200 300 400 500 600 700 800 quantity Refer to Figure 4-8. At a price of $20, a. there would be an excess supply and the law of supply and demand predicts that the price will fall from $20 to a lower price. b. there would be an excess demand and the law of supply and demand predicts that the price will rise from $20 to a higher price. c. there would be a surplus and the law of supply and demand predicts that the price will rise from $20 to a higher price. d. there would be a shortage and the law of supply and demand predicts that the price will fall from $20 to a lower price.
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Excess supply occurs when the quantity supplied of a good or service exceeds the quantity demanded at a given price. This usually leads to a surplus, where sellers are unable to sell all of their goods and may need to lower the price to attract buyers. Excess Show more…
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