Suppose a Shortage for Good X Exists

question 125

Multiple Choice

Suppose a shortage for good X exists. Given this information, we know that

• A)the price of good X will tend to rise toward the equilibrium level.
• B)the price of good X will tend to fall toward the equilibrium level.
• C)a government price floor should be imposed above the current price so that the market can work more effectively.
• D)a government price ceiling should be imposed above the current price so that the market can work more effectively.

---

Definitions:

Obligation

A duty or commitment to pay money or perform some action.

Equivalent

Equal in value, amount, function, meaning, or status; often used in mathematics to describe expressions or amounts that are the same when compared or evaluated.

Compounded Quarterly

Refers specifically to the computation of interest at four intervals in a year, on the initial investment alongside the interest from preceding periods.

Repaid

The act of paying back money previously borrowed from a lender.