-Which of the Following Statements Is Correct

question 20

Multiple Choice

-Which of the following statements is correct?

• A) A shortage and scarcity are the same thing.
• B) A shortage occurs when the quantity demanded is less than the quantity supplied at a price below the market clearing price.
• C) A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price.
• D) A shortage occurs when the quantity demanded is less than the quantity supplied at a price above the market clearing price.

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Definitions:

Claret

A term often used in British English to refer to red Bordeaux wine.

Utility Function

A mathematical representation of how different goods or bundles of goods provide satisfaction or utility to a consumer.

Substitution Effect

The change in the consumption of goods as a result of a change in their relative prices, holding the consumer's utility level constant.

Income

The financial gain received by an individual or business, typically expressed as a total earnings or profit.