Which of the Following Occurs When a Shortage Occurs in the Market

question 90

Multiple Choice

Which of the following occurs when a shortage occurs in the market for a good?

• A) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption.
• B) Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption.
• C) Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption.
• D) Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.

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Definitions:

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for limited control over market prices.

Short-run Equilibrium

A state in which supply and demand are balanced at a given price level within a short time frame, before all factors become variable.

Product Promotion

The marketing activities and strategies used to increase awareness and sales of a product.