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

Business

Jamie Gibbs

3 November, 13:51

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.

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Answers (1)

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Owen Gilmore · Answer 1

Option D

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 decrease in the market price of the product.

Explanation:

When quantity provided surpasses quantity required, a surplus endures. If the value goes up, the amount of necessitated goes downward. If the price drops, the quantity required raises. Price ceilings limit a price from growing beyond a particular level.

When a price ceiling is fixed under the equilibrium price, the amount required will pass quantity fulfilled, and excess demand or deficits will result. Price floors block a price from dropping below a reliable level. When a price floor is fixed beyond the equilibrium price, the measure supplied will exceed the quantity needed, and excess stock or surpluses will happen.