WAEC Economics 2012 Objective — Question 11

Question 11 of 49 from the West African Examinations Council (WAEC) Economics 2012 Objective paper, with the correct answer and a full explanation.

Any price below the equilibrium price will lead to

A. increase in supply
B. excess demandCorrect
C. equality of demand and supply
D. decrease in demand

Explanation

Whenever the price is below the equilibrium price, there is going to be excessive demand over supply. The equilibrium price is Pe, and when equilibrium quantity is q, but when price is lower at PL, the quantity demanded is qd while the supply is just qs.

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