Final answer:
Explanation of market forces adjusting prices above and below equilibrium.
Explanation:
Price above equilibrium: When the price is set above the equilibrium, there is a surplus of goods as quantity supplied exceeds quantity demanded. Market forces such as decreased demand and increased supply will lead the price back to equilibrium.
Price below equilibrium: Conversely, when the price is set below the equilibrium, there is a shortage of goods as quantity demanded exceeds quantity supplied. In this case, market forces such as increased demand and decreased supply will push the price up to the equilibrium level.
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