Chapter 7, Problem 10AA

To determine

To choose: The term that best completes the given sentence.

Answer to Problem 10AA

The term that best completes the given sentence is eliminate.

Explanation of Solution

When the price is fix upper of the equilibrium, then there will be greater demand which allows sellers to lower their prices in order to remove the excess. There will be a lesser supply at a price less than equilibrium which leads to an increase in the price of the good. If there is insufficient supply, a market surplus exists, which means that the quantity provided is exceed than the required quantity. Some producers won't be capable to sell all their products in this case. That will encourage them to lower their price in order to make their product more attractive.

Economics Concept Introduction

Introduction:  The surplus defines the volume of the asset or resource that exceeds the actively used component. A surplus may refer to a variety of different things like sales, income, property, and products. In financial situations, a surplus happens if the revenue received exceeds the expenditures paid.