What happens to the price of a agricultural product when demand exceeds supply?
A.
The price fluctuates randomly
B.
The price decreases
C.
The price remains unchanged
D.
The price increases
Correct answer is D
In economics, when demand exceeds supply, it creates a shortage. The price of the product will increase until the quantity demanded is equal to the quantity supplied, a state known as equilibrium. This is because the high demand and low supply create a competitive market where buyers are willing to pay more to secure the product.
