Effects of Shortage quiz #1 Flashcards
Effects of Shortage quiz #1
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What happens when there is an excess demand for a good? When there is excess demand for a good, the quantity demanded exceeds the quantity supplied, resulting in a shortage. This typically occurs when the price is set below the equilibrium price, causing more consumers to want the good than producers are willing to supply at that price. What is the numerical value of the shortage when the price is set at $4 in the example? The shortage is 9 units, calculated as the difference between the quantity demanded (15 units) and the quantity supplied (6 units). Which axes are labeled on the graph used to illustrate the shortage scenario? The axes are labeled as Price (vertical axis) and Quantity (horizontal axis). How do the demand and supply curves behave on the graph shown in the video? The demand curve slopes downward, while the supply curve slopes upward. What does setting the price below the equilibrium price cause in the market? Setting the price below equilibrium causes the quantity demanded to exceed the quantity supplied, resulting in a shortage. At a price of $4, how many units are suppliers willing to provide? Suppliers are willing to provide 6 units at a price of $4. At a price of $4, how many units do consumers want to buy? Consumers want to buy 15 units at a price of $4. What does the term 'shortage' represent in the context of supply and demand? A shortage represents the amount by which quantity demanded exceeds quantity supplied at a given price. What is indicated by the label 'P with an L' on the graph? 'P with an L' indicates the low price set in the scenario, which is $4. Why is the market not at equilibrium when there is a shortage? The market is not at equilibrium because the quantity supplied does not equal the quantity demanded.
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