Suppliers Recognize There Is a Shortage in the Market for Their

question 106

Multiple Choice

Suppliers recognize there is a shortage in the market for their product when they notice that

• A) the quantity supplied exceeds the quantity demanded.
• B) the quantity demanded is falling.
• C) inventories are falling.
• D) production exceeds new orders for the product.
• E) government economists announce a shortage exists.

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Definitions:

Average Total Cost

The total cost of production divided by the number of goods produced, representing the per-unit cost of production.

Market Price

The current price at which an asset or service can be bought or sold in a given market.

Shut Down

A short-term decision by a firm to cease production due to market conditions, not covering variable costs in the short run.

Average Variable Cost

The total variable costs divided by the quantity of output produced.