Question

When there is a shortage of a product in an unregulated market, there is a tendency for:_________
a) quantity supplied to decrease.
b) price to rise.
c) price to fall.
d) quantity demanded to increase.

Answer 1

Answer:

The correct answer is option (B).

Explanation:

According to the scenario, the most appropriate answer is option (B) because when there is a shortage of a product, the demand for the product remains the same and hence this can result in price to rise of that product.

While the other options are not correct because of the following reasons:

• Option (A) is not that appropriate because when there is a shortage of any product, it is obvious to decrease in quantity supplied but it doesn't show any tendency.

• Option (C) is not correct because when there is a shortage of any product there is no chance of price to fall.

• Option (D) is not correct because when there is a shortage of any product, it doesn't matter to increase in quantity.