When Quantity Demanded Exceeds Quantity Supplied, a _____ Occurs and Prices

question 105

Multiple Choice

When quantity demanded exceeds quantity supplied, a _____ occurs and prices are pushed _____ toward equilibrium.

• A) shortage; up
• B) shortage; down
• C) surplus; up
• D) surplus; down

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing what is sacrificed as a result of choosing one option over another.

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.

Indirect Cost

A cost that cannot be easily and conveniently traced to a specified cost object.

Cost Of Goods Sold

The total cost directly associated with producing the goods sold by a company, including materials and labor.