ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lower production of that good.
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lower the prices of that good.
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raise the prices of that good.
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shift production to another good.
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Detailed explanation-1: -When there is a shortage, producers raise prices in an attempt to. Equalize the quantity supplied and demand.
Detailed explanation-2: -If there is a shortage, the high level of demand will enable sellers to charge more for the good in question, so prices will rise. The higher prices will then motivate sellers to supply more of that good.
Detailed explanation-3: -A high price signals that producers should be producing more of a product and that consumers need to decrease their demand for the product. A low price signals that producers need to be producing less of a product and that consumers should buy more of the product.
Detailed explanation-4: -If prices are rising because of high demand from consumers, this is a signal to suppliers to expand production to meet the higher demand. If there is excess supply in a market, the price mechanism will help to eliminate a surplus of a good by allowing the market price to fall.
Detailed explanation-5: -A shortage of goods occurs when the quantity supplied is less than the quantity demanded in the market.