In a market experiencing a shortage (excess demand), how do consumers most directly experience the excess demand?

• A. They purchase more than they want at the current price because firms are forced to increase output beyond demand.
• B. They experience an immediate fall in the market price because sellers compete to get rid of unsold inventory.
• C. They face waiting lines, stockouts, or other forms of non-price rationing because the quantity demanded at the current price exceeds the quantity supplied.
• D. They enjoy a larger variety of goods and faster service because the quantity supplied exceeds the quantity demanded at the current price.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a shortage (excess demand) in a market: this occurs when the quantity demanded at the current price is greater than the quantity supplied.
2. Recognize that when there is a shortage, the market price is typically below the equilibrium price, causing more consumers to want the good than what is available.
3. Analyze how consumers experience this shortage: since the quantity supplied is insufficient to meet demand, consumers cannot all purchase the good immediately at the current price.
4. Identify common non-price rationing mechanisms that arise during shortages, such as waiting lines, stockouts (goods being out of stock), or other ways sellers limit sales to match the limited supply.
5. Conclude that consumers do not purchase more than they want or see a price fall; instead, they face these non-price rationing methods because the market price has not adjusted to clear the shortage.