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Excess supply over demand will place a price advantage on...

Excess supply over demand will place a price advantage on ____

A.

Government

B.

Foreign investors

C.

Suppliers

D.

Consumers

Correct answer is D

This is because, according to the concept of equilibrium, if supply increases while demand remains constant, there will be an excess of supply over demand. This will bring about a decrease in the equilibrium price of the commodity and an increase in the equilibrium quantity. This gave rise to the fifth law of demand and supply which states that: “an increase in the supply of a commodity will cause the equilibrium price to fall and the quantity demanded to increase, while a decrease in supply will cause the equilibrium price to rise but the quantity demanded will fall”.