Assume that the current market price is below the market clearing level. We would expect:

A) a surplus to accumulate.
B) downward pressure on the current market price.
C) upward pressure on the current market price.
D) lower production during the next time period.

Market Price

The price at which a product or service is traded in the marketplace, determined by supply and demand.

Market Clearing Level

The price and quantity at which supply equals demand, so there is no surplus or shortage in the market.

Surplus

Situation in which the quantity supplied exceeds the quantity demanded.