2
Question
In a situation of excess supply, market price tends to _________.
In a situation of excess supply, market price tends to _________.
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Solution
The correct option is C fall
In a situation of excess supply, market price tends to fall. Excess supply is a situation where the quantity demanded is less than the quantity supplied. In this situation the price reduces to cure the situation. When the price is reduced the customers demand more and supply is reduced and the situation is corrected.
In a situation of excess supply, market price tends to fall. Excess supply is a situation where the quantity demanded is less than the quantity supplied. In this situation the price reduces to cure the situation. When the price is reduced the customers demand more and supply is reduced and the situation is corrected.
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