Which one of the following would NOT occur if the market price was above the market-clearing price?

• A. A surplus of the good would develop in the market.
• B. Sellers may lower prices to reduce excess inventory.
• C. The quantity demanded would exceed the quantity supplied.
• D. Producers would be willing to supply more than consumers are willing to buy.

Answer: (C)

Verified step by step guidance

1. Understand the concept of market-clearing price: it is the price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in market equilibrium.
2. Analyze what happens when the market price is set above the market-clearing price: at a higher price, consumers generally want to buy less, and producers want to supply more.
3. Recognize that this situation leads to a surplus, meaning the quantity supplied exceeds the quantity demanded because producers are willing to sell more than consumers want to buy at that price.
4. Consider the typical market response to a surplus: sellers may lower prices to reduce excess inventory and move back toward equilibrium.
5. Identify the incorrect statement: if the price is above equilibrium, the quantity demanded would NOT exceed the quantity supplied; instead, the quantity supplied exceeds the quantity demanded.