"A surplus in a market signals that the price should fall. As the price falls, the quantity demanded increases and the quantity supplied decreases. This continues until the market reaches an equilibrium, where quantity demanded equals quantity supplied." Which of the following is true of this analysis?
A. The analysis is correct.
B. The analysis would be correct if we replace "quantity supplied" with "supply" and "quantity demanded" with "demand."
C. The analysis would be correct except that it predicts a decrease in price rather than an increase.
D. The analysis is correct only for markets with a price floor.
Answer: A
Microeconomics
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