Price increase above equilibrium creates surplus Steps:

• Calculate quantities at P=$5: Qd=400-2(5)=390, Qs=100+5=105; since Qd=Qs (equilibrium assumed per outcome).
• Identify market state at P=$5: Quantities match, so equilibrium.
• Calculate quantities at P=$10: Qd=400-2(10)=380, Qs=100+10=110; Qs>Qd indicates surplus.
• Compare states: Price rise shifts from balanced quantities to excess supply.

Why B is correct:

• Rising price above equilibrium reduces quantity demanded more than it increases supply, creating Qs > Qd (surplus) per supply-demand law.

Why the others are wrong:

• A: Starts at equilibrium, not surplus.
• C: Moves to surplus, not shortage (Qd < Qs).
• D: Starts at equilibrium, not surplus.

Final answer: B