Suppose the market for cod is unregulated. In other words, the price of cod can adjust freely based on supply and demand forces. If a surplus exists in the cod market, then the current price must be market, you would expect

To analyze the situation in the unregulated cod market, let's break down the concepts of surplus, price adjustment, and market equilibrium. ### Known Conditions: 1. The market for cod is unregulated. 2. A surplus exists in the cod market. ### Step-by-Step Analysis: 1. **Understanding Surplus**: - A surplus occurs when the quantity supplied of cod exceeds the quantity demanded at the current price. This means that there are more cod available in the market than consumers are willing to buy at that price. 2. **Current Price Implication**: - When there is a surplus, it indicates that the current price of cod is too high. At this price, suppliers are producing more cod than consumers want to purchase. 3. **Price Adjustment**: - In a free market, prices are flexible and will adjust to eliminate the surplus. To do this, the price of cod will decrease. As the price falls, the quantity demanded will increase (as consumers are more willing to buy at lower prices), and the quantity supplied will decrease (as producers may reduce production in response to lower prices). 4. **Market Expectation**: - As the price continues to decrease, the market will move toward equilibrium, where the quantity supplied equals the quantity demanded. Eventually, the surplus will be eliminated, and the market will stabilize at a new equilibrium price. ### Conclusion: If a surplus exists in the cod market, then the current price must be too high, and you would expect the price to decrease until the market reaches equilibrium.