If the price of a commodity is fixed below equilibrium, this will lead to?

A. excess demand
B. a decrease in price
C. an increase in price
D. excess supply

Correct Answer:

Option A – excess demand

Explanation

Just like the law of demand, the higher the price, the lower the quantity demanded and the lower the price the higher the quantity demanded. When the prices of goods are set below equilibrium, it will invariably lead to high demand for the product.