Excess supply over demand will place a price advantage on _____?

A. government
B. foreign investors
C. suppliers
D. consumers

Correct Answer:

Option D – consumers

Explanation

This is because, according to the concept of equilibrium, if supply increases while demand remains constant, there will be an excess of supply over demand. This will bring about a decrease in the equilibrium price of the commodity and an increase in the equilibrium quantity. This gave rise to the fifth law of demand and supply which states that: “an increase in the supply of a commodity will cause the equilibrium price to fall and the quantity demanded to increase, while a decrease in supply will cause the equilibrium price to rise but the quantity demanded will fall”.