A Shortage Occurs When

question 226

Multiple Choice

A shortage occurs when:

• A) the price of a good is too high.
• B) a market is at equilibrium.
• C) the quantity supplied is zero.
• D) the quantity demanded is greater than the quantity supplied.

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Definitions:

AVC (Average Variable Cost)

The total variable cost divided by the quantity of output produced; it varies with production.

MC (Marginal Cost)

Marginal Cost is the change in total cost that arises when the quantity produced is incremented by one unit.

Shutdown Point

The level of operations at which a company or business does not generate enough revenue to cover its variable costs, leading to a temporary or permanent closure.

AVC (Average Variable Cost)

The total variable costs (costs that vary with the level of output) divided by the quantity of output produced, representing the variable cost per unit.