What typically happens to prices when supply exceeds demand?

When supply exceeds demand, it usually creates a surplus of goods or services in the market. In this situation, sellers may have more products than buyers are willing to purchase at the current price. To encourage sales and clear out excess inventory, sellers are inclined to lower their prices. This reduction in price often attracts more buyers, as the cost becomes more appealing, thereby helping to restore balance between supply and demand.

In a competitive market, this mechanism is a natural response to variations in supply and demand. If many suppliers are unable to sell their products at higher prices due to insufficient demand, the logical reaction is to lower prices until equilibrium is reached, where the quantity supplied matches the quantity demanded.

The other choices describe scenarios that do not align with the basic principles of supply and demand. For instance, prices rising significantly would occur in the opposite scenario where demand exceeds supply. Similarly, prices remaining stable or fluctuating unpredictably would not adequately address the typical outcome of a surplus situation.