Which one of the following correctly describes how price adjustment eliminates a shortage?
A)As the price rises,the quantity demanded decreases and the quantity supplied increases.
B)As the price rises,the quantity demanded increases and the quantity supplied decreases.
C)As the price falls,the quantity demanded decreases and the quantity supplied increases.
D)As the price falls,the quantity demanded increases and the quantity supplied decreases.
E)As the price falls,the quantity demanded increases and the quantity supplied increases.

Question

Quizplus · Accepted Answer

When the price increases, the quantity supplied also increases as suppliers are incentivized to produce and sell more. At the same time, the quantity demanded decreases as consumers are less willing to pay the higher price. This results in a decrease in the shortage until the market reaches equilibrium where the quantity supplied equals the quantity demanded.

Which One of the Following Correctly Describes How Price Adjustment