Shortages are eliminated by
A) increasing quantity demanded.
B) allowing price to fall.
C) clever advertising campaigns.
D) allowing price to rise.
E) decreasing quantity supplied.

Question

Quizplus · Accepted Answer

Allowing price to rise is the most effective way to eliminate shortages because it incentivizes suppliers to increase production, while also discouraging excessive demand from buyers. As the price rises, quantity supplied will increase and quantity demanded will decrease, eventually reaching a market equilibrium where there is no longer a shortage.

Shortages Are Eliminated by