What is the outcome when there is excess supply in the market?

When there is excess supply in the market, it means that the quantity supplied by sellers is greater than the quantity demanded by buyers at a given price level. This situation typically arises when the price of a good or service is set too high, prompting sellers to produce more than what consumers are willing to buy at that price.

In such circumstances, sellers may find that their goods are not being sold, leading to an accumulation of unsold inventory. To address the excess supply, sellers might lower their prices to encourage more purchases, which can ultimately lead to an adjustment in the market toward equilibrium, where quantity supplied equals quantity demanded. This dynamic of adjusting prices due to surplus is a fundamental principle of supply and demand in economics.

By understanding this concept, it becomes clear that the correct choice accurately reflects the relationship between supply and demand during periods of excess supply.