Which explains the connection between the law of demand and excess demand?
A. The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
B. The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand.
C. The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
D. The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.

The law of demand states that lower prices lead to higher quantities demanded, which can create excess demand when supply is not sufficient. Excess demand occurs when the demand for a product exceeds what is available at that price, leading to upward price pressure. This dynamic illustrates the interaction of supply and demand in a market economy.
;

Answered by Anonymous | 2025-07-04

The law of demand indicates that as prices decrease, quantity demanded increases, resulting in excess demand when supply cannot meet this demand. Excess demand leads to upward pressure on prices, prompting suppliers to potentially increase supply or adjust prices. This dynamic illustrates how demand and supply interact in a market economy. ;

Answered by GinnyAnswer | 2025-07-04