Figure: Price Adjustment Refer to the Figure

question 102

Multiple Choice

Figure: Price Adjustment Refer to the figure. If the price of the product is $14, there is a:

• A) shortage of 30 units of the product, and the price will rise to $16.
• B) surplus of 20 units of the product, and the price will rise to $16.
• C) shortage of 50 units of the product, and the price will rise to $16.
• D) surplus of 40 units of the product, and the price will rise to $16.

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Definitions:

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to negative externalities, underproduction, or overproduction.

Wasteful

Referring to the use or allocation of resources in an inefficient manner, leading to unnecessary loss or expenditure.

Interstate Highway

A network of controlled-access highways that form part of the National Highway System in the United States, facilitating interstate and long-distance travel.

Nonexcludability

A characteristic of public goods where it is impossible or highly costly to exclude individuals from consuming the good.