In response to a surplus, how does the market price adjust?

In the context of a surplus in the market, the quantity supplied exceeds the quantity demanded at the current price, leading to excess inventory. To resolve this surplus, market dynamics typically lead to a decrease in price.

As the price falls, the goods become more attractive to consumers, which increases the quantity demanded. This relationship reflects the law of demand, where a decrease in price usually results in an increase in the quantity demanded. As consumers respond to the lower prices, more buyers will enter the market, effectively working to eliminate the surplus.

Thus, the combination of a price decrease and an increase in quantity demanded accurately describes how the market adjusts in response to a surplus, making it the correct answer.