If a shortage exists for a good in a free-market economy,the:
A)government must establish a rationing system to make sure that the good is fairly distributed.
B)price of the good will fall.
C)price of the good will rise.
D)government will order suppliers to increase the production of that good.

Question

Quizplus · Accepted Answer

In a free-market economy, prices are determined by supply and demand. If there is a shortage of a good, the demand for the good exceeds the supply, causing the price to rise. As the price rises, consumers will reduce their quantity demanded of the good, while producers will increase their quantity supplied, eventually restoring a market equilibrium. The government is not required to establish a rationing system or order suppliers to increase production in a free-market economy.

If a Shortage Exists for a Good in a Free-Market