question archive Which of the following options is correct? Suppose that there is a surplus of salmon at the fish market, therefore a
Which of the following options is correct? Suppose that there is a surplus of salmon at the fish market, therefore a
Subject:MarketingPrice:2.88 Bought3
Which of the following options is correct?
Suppose that there is a surplus of salmon at the fish market, therefore
a. the current price is above the equilibrium price and rice prices would be expected to rise.
b. the current price is above the equilibrium price and rice prices would be expected to fall.
c. the current price is below the equilibrium price and rice prices would be expected to fall.
d. the current price is below the equilibrium price and rice prices would be expected to rise.
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b. the current price is above the equilibrium price and the price is set to fall.
Reason: The surplus in the market indicates that there exists excess supply over demand. The excess supply over demand creates additional stock with the producers. the producers will then tend to dispose off this excess stock by offering lower prices for the good. This will make the current price to fall back to the equilibrium price. Also when the current price is greater than the equilibrium price, the supply and the demand curve will adjust in such a way that, the equilibrium is restored.
