As a result of a shortage,
A)Consumers increase demand for the product.
B)Producers reduce supply.
C)Producers increase output and raise price.
D)Government purchases decrease.

Question

Quizplus · Accepted Answer

When there is a shortage, producers may choose to increase output to meet the demand, but they may also choose to raise the price to maximize profits. Therefore, the correct choice is C, where producers increase output and raise price. Options A and D do not describe the behavior of producers during a shortage, and option B implies that producers are not trying to maximize profits.

As a Result of a Shortage