Question

At $5 a bushel, there is an excess supply of wheat. Is this price above or below the equilibrium price?

Answer 1

Since there is an excess supply of wheat, the price is above the equilibrium price because not enough consumers are willing to buy the good at $5 a bushel. So there is a decrease in demand for this product due to its high price.

Answer 2

It is a price floor above the equilibrium price.The price is too high so that the suppliers will produce more than the consumption.