Excess supply leads to ____________, __________ and _____________.

The correct answer is Option 2: Competition among sellers, Decrease in price, Surplus of commodity in the market

 

• Excess supply occurs when quantity supplied > quantity demanded at a given price.
• This leads to a surplus of goods in the market, meaning sellers have more goods than buyers are willing to purchase.
• As a result:
  • Sellers compete among themselves to sell their goods.
  • This competition among sellers forces them to lower prices to attract buyers.
  • The price continues to fall until the market reaches equilibrium where supply matches demand.