A shortage will occur whenever:Multiple Choicethe supply curve is upward sloping.price is set above the equilibrium price.price is set below the equilibrium price.prices are decreasing.
Question
A shortage will occur whenever:Multiple Choicethe supply curve is upward sloping.price is set above the equilibrium price.price is set below the equilibrium price.prices are decreasing.
Solution
A shortage will occur whenever the price is set below the equilibrium price.
Here's why:
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The equilibrium price is the price at which the quantity demanded by consumers equals the quantity supplied by producers.
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If the price is set below the equilibrium price, the quantity demanded by consumers will exceed the quantity supplied by producers.
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This is because consumers will want to buy more of the product (since it's cheaper), but producers will not want to supply as much (since they're getting less money for each unit sold).
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This imbalance between quantity demanded and quantity supplied is what creates a shortage.
Similar Questions
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