Answer to Question #57629 in Economics for Parker

Question

When there is excess supply...
A) prices will tend to rise
B) prises will tend to fall
C)demand will rise
D)the government will impose price ceilings ?

Answer 1

When there is excess supply, there is a surplus, so to sell this excess goods the suppliers will decrease prices, so the prices will tend to fall. So, the right answer is B) prices will tend to fall.