Question

Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?
As prices fall, quantity demanded goes up.
As prices fall, quantity demanded goes down.
As prices fall, quantity demanded stays the same.
As prices fall, quantity demanded disappears.

Answer 1

According to economic principles, as prices fall, quantity demanded goes up.

What is equilibrium price?

The market price at which the amount of goods supplied and the amount of goods sought are equal is referred to as the "equilibrium price."

The demand and supply model's reasoning is straightforward. For instance, when sugar prices are lower, the market's demand is automatically increased.

Excess demand is depicted in the graph. The price is less than the equilibrium price, as shown by p2 on the graph, since as the price decreases, the quantity demanded increases.

As a result, option (a) As prices fall, quantity demanded goes up is correct.

Learn more about on equilibrium price, here:  

https://brainly.com/question/13458865

#SPJ1