A Shortage Exists in a Market If

question 33

Multiple Choice

A shortage exists in a market if

• A)there is an excess supply of the good.
• B)quantity supplied exceeds quantity demanded.
• C)the current price is below its equilibrium price.
• D)All of the above are correct.

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Definitions:

Social Cost

The total cost to society, including both private costs incurred by producers and external costs to other parties not involved in the transaction.

Private Value

The value of an asset or service as perceived by an individual or entity, not necessarily reflecting its market value.

Socially Optimal

A state of resource allocation where social welfare is maximized, balancing benefits and costs to society.

Private Value

Refers to the specific value that an individual or organization assigns to a good or service, based on personal assessment rather than market value.