The existence of a shortage

Question

Quizplus · Accepted Answer

When there is a shortage, there is more demand for the product than there is supply, causing the price to increase as consumers are willing to pay more for the limited goods available. Option A is incorrect as a shortage actually causes prices to rise, not fall. Option C is incorrect as a shortage indicates that resources are not being allocated efficiently as there is not enough supply to meet demand. Option D is incorrect as shortages can and do occur in market economies.

The Existence of a Shortage