Question

At a price more than equilibrium price, what will be supply (S) compared to demand (D)?

• A. \( D>S \)
• B. \( D<S \)
• C. \( D = S \)
• D. None of these

Hint:

When the price is above the equilibrium, there is a surplus, meaning supply exceeds demand.

Answer 1

The Correct Option is B

Step 1: Understanding equilibrium.
In the context of supply and demand, equilibrium is achieved when the quantity supplied (\( S \)) equals the quantity demanded (\( D \)) at a given price. At this price, there is no surplus or shortage. If the price is set above the equilibrium price, the quantity supplied will exceed the quantity demanded, leading to a surplus.

Step 2: Analyzing the options.
(A) \( D>S \): This would occur if the price is set below the equilibrium price, causing demand to exceed supply, resulting in a shortage.
(B) \( D<S \): Correct. When the price is above equilibrium, the supply exceeds demand, leading to a surplus.
(C) \( D = S \): This occurs at the equilibrium price, but it is not applicable when the price is above the equilibrium price.
(D) None of these: This is incorrect, as option (B) is the correct answer.

Step 3: Conclusion.
At a price more than the equilibrium price, the supply will be greater than the demand, so the correct answer is (B) \( D<S \).