A Shortage Occurs When

question 161

Multiple Choice

A shortage occurs when

• A) demand is greater than supply.
• B) the equilibrium price is too high.
• C) quantity demanded exceeds quantity supplied.
• D) quantity supplied exceeds quantity demanded.
• E) price is above the equilibrium pricE.

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Definitions:

Cost Per Unit

The total cost associated with producing one unit of a product, including fixed and variable costs.

Economic Profit

The disparity between what a company earns in total and what it spends, counting both direct and indirect costs.

Self-Interest

The motivation driving individuals to pursue their own benefits or advantages, often considered a fundamental economic assumption.

Guiding Function Of Prices

The role of prices in signaling to both buyers and sellers about the relative scarcity or abundance of goods and services, thus guiding their economic decisions.