In the short-run if there is a surplus in the market for a product,the rationing function of price can be expected to cause
A)an increasing shift in the demand for the product.
B)a decreasing shift in the supply of the product.
C)an increase in the market price of the product.
D)a decrease in the market price of the product.

Question

Quizplus · Accepted Answer

In the short-run, if there is a surplus in the market for a product, the rationing function of price will cause a decrease in the market price of the product. This is because there is an excess supply of the product, and suppliers will need to lower the price to incentivize consumers to purchase more and reduce the surplus. As the price decreases, the quantity demanded will increase until the surplus is eliminated. Therefore, option D is the correct choice. Options A and B are incorrect because they do not describe the effect of price rationing on the market. Option C is also incorrect because if there is a surplus, market price will decrease, not increase.

In the Short-Run If There Is a Surplus in the Market