Question

all else equal, if the price in a market is set below the equilibrium price, and if prices are allowed to move freely, which of the following will occur?
the supply will increase to meet the excess demand.
producers will supply more at a higher price until the equilibrium price is reached.
producers will supply less at a lower price until the equilibrium price is reached.

Explanation:

When the market price is below equilibrium, excess demand occurs (quantity demanded > quantity supplied). Since prices can move freely, upward pressure on price emerges. Producers respond to higher prices by increasing quantity supplied, and this process continues until the equilibrium price (where quantity supplied equals quantity demanded) is reached. The first option is incorrect because supply (the entire curve) does not shift; only quantity supplied changes along the existing supply curve. The third option is incorrect as producers supply more, not less, when prices rise toward equilibrium.

Answer:

Producers will supply more at a higher price until the equilibrium price is reached.