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Homework answers / question archive / There is a surplus of tomatoes in the market
There is a surplus of tomatoes in the market. This implies that
A. the current price is set above the equilibrium level.
B. the price will be rising, as a result.
C. supply of tomatoes is more than the demand.
D. quantity demanded is more than quantity supplied.
A. The current price is set above the equilibrium level.
Reason: When the current price is set above the market equilibrium level, at a higher price than the equilibrium price, the quantity supplied by the sellers will be much greater than the quantity demanded by the consumers. Since the consumer will reduce the quantity demanded and the sellers will increase the quantity supplied of the good at the higher price, there exists excess supply in the market. This excess supply is what creates surplus of the good in the market.
