If a computer manufacturing company introduces a new model and finds that orders from wholesalers far exceed the number of units that are being produced,

there is an excess supply and price can be expected to decrease.

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there is an excess supply and price can be expected to increase.

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there is an excess demand and price can be expected to decrease.

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there is an excess demand and price can be expected to increase

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Solution

The correct option is D
there is an excess demand and price can be expected to increase

If a computer manufacturing company introduces a new model and finds that orders from wholesalers far exceed the number of units that are being produced, there is an excess demand and price can be expected to increase.

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Similar questions

Suppose the demand and supply curves of a commodity are given as:
$Y^{d} = 200 - p$
$Y^{s} = 120 + p$
(i) Find the equilibrium price and equilibrium quantity.
(ii) Also show that at a price of Rs. 30, there is excess demand and at a price of Rs. 45, there is excess supply.

What happens to equilibrium price of a commodity if there is an 'increase' in its demand and 'decrease' in its supply ?

Consider the following demand and supply functions for a good.

Quantity demanded = 160 - 2p

Quantity supplied = - 40 + 2p

(i) Calculate the equilibrium price and quantity.

(ii) Find out a price at which there is excess demand.

(iii) Find out a price at which there is excess supply.

What happens to equilibrium price of a commodity if there is ‘decrease’ in its demand and ‘increase’ in its supply ?

Q. When supply curve shifts to the right, _________.
A. There is excess supply
B. There is deficient supply
C. Prices tend to fall
D. Prices tend to rise

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