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In Response to a Shortage,the Market Price of a Good

question 181

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In response to a shortage,the market price of a good will rise.As the price rises,the demand will decrease and supply will increase until equilibrium is reached.


Definitions:

Margin

Net operating income divided by sales.

Contribution Margin Ratio

The percentage of each sale that contributes to covering fixed costs, calculated as contribution margin divided by sales revenue.

Fixed Expenses

Expenditures that stay unchanged despite differences in the volume of production or sales, covering items like rental fees, payroll, and coverage costs.

Sales

The exchange of goods or services for money, quantifying the performance and profitability of a business.

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