How Do Price Adjustments Eliminate a Shortage

question 115

Multiple Choice

How do price adjustments eliminate a shortage?

• A) As price rises, quantity demanded decreases and quantity supplied increases.
• B) As price rises, quantity demanded increases and quantity supplied decreases.
• C) As price falls, quantity demanded decreases and quantity supplied increases.
• D) As price falls, quantity demanded increases and quantity supplied decreases.
• E) As price falls, quantity demanded increases and quantity supplied increases.

---

Definitions:

Opportunity Costs

The advantages forgone by selecting one option instead of another.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent or salaries.

Indirect Costs

Costs that are not directly traceable to a specific product or activity, such as overhead and administrative expenses.

General Electric

General Electric is a multinational conglomerate corporation operating in sectors like aviation, power, renewable energy, and healthcare.