when there is a shortage of a product in a market the: a. price must be above the equilibrium price. b. price must be below the equilibrium price. c. producers will reduce output and sales will fall. d. price will fall.

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19-12-2022
Business

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when there is a shortage of a product in a market the: a. price must be above the equilibrium price. b. price must be below the equilibrium price. c. producers will reduce output and sales will fall. d. price will fall.

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akankshasharma92 akankshasharma92 · Answer 1 · 2022-12-21T15:15:41-05:00

(A)price must be above the equilibrium price. When demand for an item or service exceeds supply at the going rate, there is a shortage, which drives up the cost. Demand going up, everything else staying the same. will result in a rise in the equilibrium price.

In a market that is operating normally, the quantity provided and the quantity sought are in balance at a price determined by market forces. A shortage occurs when there is an imbalance between supply and demand for a good or service. The market is considered to be in a condition of disequilibrium when this happens. This circumstance often only lasts a short while before the product is supplied and the market returns to normal. It should be noted that the terms "shortage" and "scarcity" in economics should not be used interchangeably since while shortages are often transient and remediable, scarcities tend to be systemic and difficult to refill.

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