In the market for tilapia, what happens if the price is set above the equilibrium price?

• A. There will be no effect on the market since price does not influence supply or demand.
• B. A surplus of tilapia will occur because quantity supplied exceeds quantity demanded.
• C. The market will clear immediately as quantity supplied equals quantity demanded.
• D. A shortage of tilapia will occur because quantity demanded exceeds quantity supplied.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of market equilibrium, which occurs where the quantity demanded equals the quantity supplied at a certain price, called the equilibrium price.
2. Step 2: Recognize that if the price is set above the equilibrium price, the price is higher than what consumers are willing to pay for the quantity supplied at that price.
3. Step 3: Analyze the effect on quantity demanded and quantity supplied: at a higher price, quantity demanded decreases because consumers buy less, and quantity supplied increases because producers are willing to supply more.
4. Step 4: Compare quantity supplied and quantity demanded at this higher price. Since quantity supplied is greater than quantity demanded, a surplus occurs in the market.
5. Step 5: Conclude that this surplus means there are more tilapia available than consumers want to buy at that price, leading to unsold stock until the price adjusts back toward equilibrium.