When a Shortage Occurs in the Market for a Good

question 19

Multiple Choice

When a shortage occurs in the market for a good, quantity

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

Grasp the elasticity concept and its impact on the tax incidence.

Comprehend the principles behind different tax structures (progressive, regressive, and proportional) and their implications on equity and efficiency.

Interpret how taxes influence market outcomes, including deadweight loss and changes to consumer and producer surplus.

Differentiate among the various principles guiding taxation policies, such as the benefits principle and the ability-to-pay principle.

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Definitions:

Different Versions

Variations of a product, service, or document that are made to satisfy specific needs or preferences of different users or customers.

Trade Deficit

A situation that occurs when a country imports more goods and services than it exports, resulting in a negative balance of trade.

Trade Surplus

A situation where a country's exports exceed its imports during a specific time period, indicating a positive balance of trade.

Exchange Control

Refers to the regulation of a country’s currency exchange rate.