A shortage will occur when
A. the price is below the market clearing level.
B. the price is above the market clearing level.
C. there is an excess quantity supplied.
D. the price equals the market clearing level.
Answer: A
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If firms enter a purely competitive industry, then in the long run this change will shift the industry:
A. demand curve to the right, and the market price will increase. B. supply curve to the left, and the market price will increase. C. demand curve to the left, and the market price will decrease. D. supply curve to the right, and the market price will decrease.
Which of the following is TRUE of an oligopoly?
A. They do not react to actions of their competitors. B. Each firm produces a small portion of the total output. C. They engage in nonprice competition. D. Firms do not care what their competitors do.
The term "transportation revolution" implies:
a. binding the East and West politically. b. binding the East and West economically. c. rapidly introduced technological innovations. d. All of the above are implied.
When there is a positive externality associated with the watering of one's lawn, the free market results in:
a. not enough lawn watering. b. too much lawn watering. c. the socially optimal level of lawn watering. d. people watering each other's lawns. e. government subsidies for lawn watering.