Question on: JAMB Economics - 2014
When price is set below equilibrium, this will lead to
A
an increase in the quantity supplied
B
a new equilibrium
C
a decrease in the quantity supplied
D
a fall in price
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Correct Option: D
When the price is set below the equilibrium price, the quantity demanded will exceed the quantity supplied, leading to a shortage. This shortage incentivizes sellers to increase their prices. At the same time, at lower prices, suppliers are less willing to supply goods. Therefore, quantity supplied decreases.
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