Answer:
a. Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption
Explanation:
If there is a shortage, demand exceeds supply. This increase in demand leads to a rise in price. The rise in price encourages more suppliers to enter the market and this leads to an increase in output. The increase in supply is in line with the law of supply which says the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.
Because of the rise in price, consumers would demand less according to the law of demand which says the lower the price, the higher the quantity demanded and the higher the price, the lower the quantity demanded.
