The current market price for good X is below the equilibrium price, and then the demand curve for X shifts rightward. What is the likely outcome of the demand shift?
A) The surplus increases.
B) The surplus decreases.
C) The shortage increases.
D) The shortage decreases.

Question

Quizplus · Accepted Answer

When the demand curve for a good shifts rightward, it indicates an increase in demand. If the current market price is already below the equilibrium price, this situation would initially result in a shortage (where demand exceeds supply). A rightward shift in the demand curve would exacerbate this shortage by increasing demand even further, thus making the shortage larger.

The Current Market Price for Good X Is Below the Equilibrium