A market shortage occurs if the quantity:
A) demanded is greater than the quantity supplied.
B) demanded is less than the quantity supplied.
C) demanded is equal to the quantity supplied.
D) supplied is greater than the quantity demanded.
Ans: A) demanded is greater than the quantity supplied.
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Suppose a firm is employing labour (L) and capital (K) such that MPK/MPL = PK/PL. If the price of labour rises, the cost -minimizing firm should:
a) employ more capital and less labour because MPK/MPL < PK/PL. b) do nothing. c) employ more labour and less capital because MPK/MPL > PK/PL. d) employ more capital and less labour because MPK/MPL > PK/PL. e) employ more labour and less capital because MPK/MPL < PK/PL.
"Economic profits are less than or at most equal to accounting profits." Do you agree or disagree? Explain
What will be an ideal response?