-Refer to Exhibit 3-8.A price of $1 will result in a ___________________ in this market which will cause the price of the product to gravitate ________________.
A) shortage; downward
B) shortage; upward
C) surplus; downward
D) surplus; upward

Question

-Refer to Exhibit 3-8.A price of $1 will result in a ___________________ in this market which will cause the price of the product to gravitate ________________.
A) shortage; downward 
B) shortage; upward 
C) surplus; downward 
D) surplus; upward

Quizplus · Accepted Answer

At a price of $1, the quantity demanded exceeds the quantity supplied, leading to a shortage. This shortage puts upward pressure on prices as consumers compete for the limited available supply, causing the price to gravitate upward.