When a Shortage of a Good Is Present Due to a Price

question 187

Multiple Choice

When a shortage of a good is present due to a price ceiling,

• A) the amount supplied will be greater than the amount demanded.
• B) the quality of the good will generally improve.
• C) non-price factors, such as discrimination or waiting in line, will play a greater role in the allocation of the good.
• D) the demand for the product will increase and, thereby, eliminate the shortage.

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Definitions:

Business Activity

Any actions undertaken by a company as part of its operations, including production, sales, marketing, and administration.

Unit Costs

Unit Costs refer to the total expenditure incurred to produce, store, and sell one unit of a product, including all variable and fixed costs.

Variable

An element, feature, or factor that is liable to vary or change; in science and mathematics, a quantity that can assume any of a set of values.

Fixed Costs

Charges that are unaffected by changes in production or sales volumes, like lease payments, employee salaries, and insurance costs.