VirtualSC Economics Honors Practice Exam 2025 – The Complete All-in-One Guide to Exam Success!

When the price of a good is set above the equilibrium price, the quantity supplied exceeds the quantity demanded. This discrepancy leads to a situation known as a surplus, where there are more goods available than consumers are willing to purchase at that price.

In a typical market, the equilibrium price is the point where the quantity of goods supplied is equal to the quantity demanded. If the price rises above this level, sellers are willing to supply more of the good due to the higher price, but buyers are not willing to purchase as much because the price is now higher than they would prefer to pay. As a result, the excess supply—the surplus—creates downward pressure on the price, prompting sellers to reduce prices until they reach the equilibrium point again, where supply meets demand. This illustrates the market's self-correcting mechanism.

The other options do not accurately describe the situation that occurs when the price is above the equilibrium. A shortage occurs below the equilibrium price, while matching demand and supply describes equilibrium conditions, and stabilization of prices does not reflect the dynamics of surplus created by an above-equilibrium price.