Price above equilibrium causes surplus

Steps:

• Locate equilibrium price where demand curve intersects supply curve.
• Compare P1 to equilibrium: P1 is above it in standard diagrams.
• At P1, quantity supplied exceeds quantity demanded.
• Result is unsold carrots, creating a surplus.

Why B is correct:

• Surplus defined as quantity supplied greater than quantity demanded when price exceeds equilibrium (law of supply and demand).

Why the others are wrong:

• A: Shortage occurs below equilibrium, where demand exceeds supply.
• C: Sales equal quantity demanded, not necessarily increasing; surplus discourages sales.
• D: Market clears only at equilibrium where quantity demanded equals quantity supplied.

Final answer: B