-Which of the following situations could generate a shortage?
A) Demand for a good increases, resulting in a new higher market clearing price.
B) Demand for a good decreases, resulting in a new lower market clearing price.
C) Demand for a good increases, but the price is not permitted to rise.
D) Demand for a good decreases, but the price is not permitted to fall.

Question

-Which of the following situations could generate a shortage?
A) Demand for a good increases, resulting in a new higher market clearing price. 
B) Demand for a good decreases, resulting in a new lower market clearing price. 
C) Demand for a good increases, but the price is not permitted to rise. 
D) Demand for a good decreases, but the price is not permitted to fall.

Quizplus · Accepted Answer

A shortage occurs when the demand for a good exceeds its supply at a particular price. If demand increases but the price is artificially kept from rising, the quantity demanded will surpass the quantity supplied, leading to a shortage.

-Which of the Following Situations Could Generate a Shortage