When market price is above equilibrium price, (LO3) a) market price will risc b) equilibrium price will rise c) market price will fall d) equilibrium price will fall

Equilibrium price is the price at which the quantity demanded by consumers is equal to the quantity supplied by producers. In other words, it's the price at which the market is balanced, with no surplus or shortage of the product.

Market price is the current price at which a product or service is being bought and sold in the market. Changes in supply and demand can cause the market price to fluctuate over time.

When the market price is above the equilibrium price, it means that the current price is higher than the price at which supply and demand are balanced. Now, let's analyze the given options to determine which one is correct: a) Market price will rise: This statement is not correct because when the market price is already higher than the equilibrium price, it will cause a surplus (quantity supplied exceeds quantity demanded), which will put downward pressure on the market price. b) Equilibrium price will rise: This statement is not correct because the equilibrium price is determined by the balance of supply and demand. The market price being above equilibrium may only influence the short-term adjustments but won't change the equilibrium price itself. c) Market price will fall: This statement is correct. When the market price is above the equilibrium price, there's a surplus, which means producers will lower their prices to sell the excess supply, causing the market price to fall toward the equilibrium price. d) Equilibrium price will fall: This statement is not correct because the equilibrium price is determined by the balance of supply and demand. As mentioned in option b, the market price being above equilibrium may only influence short-term adjustments but will not change the equilibrium price itself.

Based on the analysis of the given options, the correct answer to this question is c) Market price will fall, as it describes the accurate relationship between market price and equilibrium price when the market price is above the equilibrium price.