Question

Based on the laws of supply and demand, which situation would lead to a shortage? A) Consumers are unwilling to pay for the product. B) Businesses are unwilling to reduce the inventory. C) The price of a product falls below the equilibrium price. D) The price of a product rises above the equilibrium price.

Answer 1

Answer:

C) The price of a product falls below the equilibrium price.

Explanation:

On the off chance that the market cost is above the equilibrium value, the stock provided is more prominent than demand requested, making an excess. Market cost will fall.  

For example in the event that you are the maker, you have a great deal of abundance stock that can't sell. Will, you put them at a bargain? It is definitely a yes. When you bring down the cost of your item, your item's amount requested will ascend until the balance is come to. Thus, surplus drives cost down.  

When the market cost is below the equilibrium price, stock provided is not as much as demand requested, making a shortage. The market isn't clear. It is in deficiency. Market cost will rise due to this deficiency. In the event that you are the maker, your item is constantly out of stock. Will you raise the cost to make more benefits? Most revenue-driven firms will say yes. When you raise the cost of your item, your item's amount requested will drop until the balance is come to. In this manner, shortage drives cost up.  

Answer 2

The answer is; C

Equilibrium price is determined through the balance between the quality of the good or service being  supplied and its demand in the market (wit6hout external influence such as from government). If the market price is set higher than the equilibrium price, then the good or service will be taken up more by the market than it can be replenished by the supplier/manufacturers hence creating a shortage in the market.