If there is a shortage in a free market, then
A) consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level.
B) consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level.
C) suppliers will decrease their output to match demand.
D) suppliers will accept any price below equilibrium.

Question

Quizplus · Accepted Answer

In a free market, a shortage occurs when the quantity demanded exceeds the quantity supplied at the current market price. This creates a situation where buyers compete with each other to purchase the limited supply, leading to an increase in the price as individuals are willing to pay more to acquire the good. Therefore, consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level where the quantity demanded is equal to the quantity supplied.

If There Is a Shortage in a Free Market, Then