Economics · Market Equilibrium & Excess Demand

In market equilibrium, if demand exceeds supply (excess demand E(P) = D(P) - S(P) > 0), for dynamic market stability, the rate of change of excess demand with respect to price, dEdP, must be:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Positive or negative depending on whether the commodity is a luxury or necessity
2Zero
3Positive
4Negative✓

Correct answer

Negative

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