7. What problem occurs when supply outpaces demand? \( \begin{array}{l}\text { a. Inflation } \\ \text { b. Surplus } \\ \text { c. Deficit } \\ \text { d. Monopoly }\end{array} \)

When supply outpaces demand, the primary problem that occurs is a surplus. Here's a breakdown of the options: - **a. Inflation**: This occurs when demand outpaces supply, leading to rising prices. - **b. Surplus**: This is the correct answer. A surplus happens when there is more supply of a product than there is demand for it, resulting in excess inventory. - **c. Deficit**: This refers to a situation where demand exceeds supply, not the other way around. - **d. Monopoly**: This is a market structure where a single seller controls the entire market, which is unrelated to the balance of supply and demand. Thus, the correct answer is **b. Surplus**.