Excess supply over demand will place a price advantage on _____

1. Analyze the question The question asks who benefits from a price advantage when supply is greater than demand (excess supply, also called a surplus).

2. Explain the concept

• Excess supply happens when the quantity suppliers offer is greater than the quantity consumers want to buy at the current price.
• Sellers are left with unsold goods, so they compete with each other by lowering prices to clear their stock.
• The market price moves downward until it reaches equilibrium, where quantity supplied equals quantity demanded.

3. Step-by-step solution

1. At the current price, Qs > Qd, so there is a surplus.
2. Suppliers have unsold stock, which pushes them to cut prices.
3. Lower prices mean buyers pay less for the same goods, and that is a price advantage.
4. Suppliers do not gain from this. They earn less per unit and may even sell at a loss.
5. Government and foreign investors are not directly affected by the price fall in this way.

Example: Suppose there is a bumper harvest of tomatoes in Kano. Supply far exceeds demand, so prices at the market drop. Buyers pay less for tomatoes, while the farmers earn less.

4. Answer The price advantage goes to the consumers, which is option D.

5. Exam tip Remember this pairing:

• Excess supply → prices fall → consumers gain
• Excess demand → prices rise → suppliers gain

Ask yourself, "Who is happy when prices drop?" The buyers are, and that is a quick way to check your answer.