When a surplus arises , the price __ to its equilibrium, which __ A. rises; decreases demand and increases supply B. rises; decreases the quantity demanded and increases the quantity supplied C. falls; increases the quantity demanded and decreases the quantity supplied D. falls; increases demand and decreases supply

The correct answer is C. falls; increases the quantity demanded and decreases the quantity supplied.<br /><br />When a surplus arises in a market, it means that the quantity supplied exceeds the quantity demanded at the current price. In this situation, the price will fall to reach a new equilibrium where the quantity demanded equals the quantity supplied.<br /><br />As the price falls, the quantity demanded will increase because consumers are willing to buy more at a lower price. At the same time, the quantity supplied will decrease because producers are less willing to supply as much at a lower price. This adjustment continues until the market reaches a new equilibrium where the quantity demanded equals the quantity supplied.