If a shortage exists for a good in a free-market economy,the:
A) Price of the good will rise.
B) Price of the good will fall.
C) Government will order suppliers to increase the production of that good.
D) Government must establish a rationing system to make sure that the good is fairly distributeD.

Question

Quizplus · Accepted Answer

In a free-market economy, prices are determined by supply and demand. If there is a shortage of a good, demand will exceed supply, causing prices to rise as consumers compete for the limited amount available. This serves as a signal to producers to increase production in order to meet the demand and take advantage of the higher prices. Therefore, option A is the correct choice.

If a Shortage Exists for a Good in a Free-Market