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

• A. Sellers may lower their prices to increase sales
• B. A surplus of the good
• C. A shortage of the good
• D. Quantity supplied exceeds quantity demanded

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of market-clearing price, which is the price at which quantity demanded equals quantity supplied, resulting in market equilibrium.
2. Step 2: Recognize that if the market price is above the market-clearing price, the quantity supplied will exceed the quantity demanded, creating a surplus of the good.
3. Step 3: Analyze the behavior of sellers in response to a surplus; sellers may lower their prices to increase sales and reduce excess inventory.
4. Step 4: Identify that a shortage of the good occurs when the price is below the market-clearing price, causing quantity demanded to exceed quantity supplied, which is the opposite of the given scenario.
5. Step 5: Conclude that the statement 'A shortage of the good' would NOT occur if the market price was above the market-clearing price, because a surplus, not a shortage, results from prices above equilibrium.