Surplus occurs when the price of a good is sustained at what level?

A surplus occurs when the price of a good is sustained above the equilibrium price. At this elevated price level, the quantity supplied by producers exceeds the quantity demanded by consumers. When the price is too high, consumers tend to purchase less of the product, while producers are incentivized to supply more because of the higher prices. This imbalance leads to excess inventory, which is termed a surplus.

The equilibrium price, on the other hand, is the point at which the quantity of the good demanded by consumers equals the quantity supplied by producers, meaning there is neither a surplus nor a shortage. When the price is set below this equilibrium level, the opposite occurs; there is a shortage as demand outstrips supply.

Therefore, for a surplus to exist, the price must be sustained at a level that is higher than what would balance out supply and demand, explaining why sustaining a price above the equilibrium leads to surplus conditions in the market.