Questions: Assume that the price in a market is currently below the equilibrium price. Explain exactly why that situation will change by putting the steps in the correct order. Drag and drop options into correct order and submit. For keyboard navigation... Show more v Some buyers are willing to pay more for a good and sellers can raise prices while still selling all of their supply There is a shortage since quantity demanded is greater than quantity supplied Quantity demanded begins to decrease and quantity supplied increases The shortage becomes smaller The steps repeat until there is a new equilibrium A new equilibrium is reached with a larger quantity exchanged and a higher price Prices begin to rise

To explain why the situation where the price is below the equilibrium price will change, we need to put the steps in the correct order:

1. There is a shortage since quantity demanded is greater than quantity supplied: When the price is below the equilibrium, more consumers want to buy the product than there are products available, creating a shortage.

2. Some buyers are willing to pay more for a good and sellers can raise prices while still selling all of their supply: Due to the shortage, buyers are willing to pay more to secure the product, and sellers recognize they can increase prices without losing sales.

3. Prices begin to rise: Sellers start raising prices in response to the willingness of buyers to pay more.

4. Quantity demanded begins to decrease and quantity supplied increases: As prices rise, some buyers drop out of the market, reducing the quantity demanded. Simultaneously, higher prices incentivize sellers to supply more of the product.

5. The shortage becomes smaller: With the decrease in quantity demanded and increase in quantity supplied, the shortage starts to diminish.

6. The steps repeat until there is a new equilibrium: The process of adjusting prices continues, with quantity demanded and supplied moving closer together.

7. A new equilibrium is reached with a larger quantity exchanged and a higher price: Eventually, the market reaches a new equilibrium where the quantity supplied equals the quantity demanded at a higher price than initially.

In summary, when the price is below equilibrium, a shortage occurs, prompting price increases. This leads to adjustments in quantity demanded and supplied until a new equilibrium is established with a higher price and larger quantity exchanged.