When the price of a good is above the equilibrium, there will be

Step 1: Analyze the question We are asked what happens in a market when the price of a good is set above the equilibrium price.

Step 2: Explain the concept Equilibrium price is the price at which quantity demanded (Qd) equals quantity supplied (Qs). Price changes affect demand and supply in opposite ways:

• A higher price means consumers want to buy less, so Qd falls.
• A higher price means producers want to sell more, so Qs rises.

Step 3: Show the solution Take a price above equilibrium, for example:

• Equilibrium price = ₦100, where Qd = Qs = 500 units
• Price set at ₦150: Qd = 300 units, Qs = 700 units

Here Qs > Qd, so there are 400 units of unsold goods. This excess supply is called a surplus.

In a free market, the surplus pushes sellers to lower prices until the market returns to equilibrium.

Step 4: Check the other options

• A. Shortage: This happens when the price is below equilibrium (Qd > Qs). It is the opposite of this case.
• C. Unemployment: This is a labour market issue, not the direct result of a price above equilibrium for a good.
• D. Inflation: This is a sustained general rise in the price level, not a market-specific imbalance.
• B. Surplus: Correct, because Qs > Qd.

Answer: B. a surplus

Exam tip: Remember "Above = Abundance" (surplus), and "Below = Bare shelves" (shortage). It works every time for questions on price relative to equilibrium.