Figure 3-5
-Refer to Figure 3-5.In a free market such as that depicted above,a shortage is eliminated by
A)a price increase,increasing the supply and decreasing the demand.
B)a price decrease,decreasing the supply and increasing the demand.
C)a price decrease,decreasing the quantity supplied and increasing the quantity demanded.
D)a price increase,increasing the quantity supplied and decreasing the quantity demanded.

Question

Figure 3-5 
-Refer to Figure 3-5.In a free market such as that depicted above,a shortage is eliminated by
A)a price increase,increasing the supply and decreasing the demand. 
B)a price decrease,decreasing the supply and increasing the demand. 
C)a price decrease,decreasing the quantity supplied and increasing the quantity demanded. 
D)a price increase,increasing the quantity supplied and decreasing the quantity demanded.

Quizplus · Accepted Answer

In a free market, a shortage occurs when the quantity demanded exceeds the quantity supplied at the current price. To eliminate the shortage, suppliers will increase the price, which will then increase the quantity supplied and decrease the quantity demanded until the market reaches equilibrium. Therefore, the correct answer is D) a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Figure 3-5 -Refer to Figure 3-5.In a Free Market Such as That