Question

all else equal, if the price in a market is set below the equilibrium price, which of the following is true? there is excess supply. there is excess demand. consumers are willing and able to demand at the equilibrium quantity. producers are willing and able to supply at the equilibrium quantity.

Explanation:

When a market price is set below the equilibrium price, according to basic supply and demand principles:

1. At a lower price, consumers want to buy more of the good (quantity demanded increases).
2. At a lower price, producers want to supply less of the good (quantity supplied decreases).
3. This creates a situation where quantity demanded exceeds quantity supplied, which is excess demand. The other options are incorrect: excess supply occurs when price is above equilibrium, consumers cannot demand equilibrium quantity at a below-equilibrium price (since supply is lower), and producers will not supply equilibrium quantity at a lower price.

Answer:

There is excess demand.