Which scenario would cause a surplus in a market?

• A. Decrease in demand with constant supply
• B. Increase in demand with constant supply
• C. Increase in supply with constant demand
• D. Decrease in supply with constant demand

Answer: (C)

A surplus occurs when quantity supplied exceeds quantity demanded at the current price. If demand stays the same but supply increases, producers are offering more of the good than buyers want to purchase at that price, creating a surplus. To clear the excess, prices typically fall, encouraging more buyers to buy and/or discouraging some production until supply and demand align. The other scenarios would lead to shortages rather than surpluses, since they involve less demand or less supply. So, increasing supply while demand remains constant is the situation that creates a surplus.