What is the difference between scarcity and a shortage?
What will be an ideal response?
Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants. A shortage of a good occurs only if the quantity demanded is greater than the quantity supplied at the current price.
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If this year's price level exceeds last year's
A) the inflation rate between these years has been positive. B) the inflation rate is accelerating. C) deflation is occurring. D) no relative price changes are occurring.
Market prices provide information to consumers, helping them coordinate their activities so long as
a. competition is present and buyers and sellers are free to choose mutually agreeable prices. b. prices are not allowed to rise too high, causing a shortage. c. prices are legally kept equal in all markets, preventing unfair price increases in markets with shortages and unfair price decreases when a market surplus is present. d. the government carefully screens producers and effectively keeps inefficient producers out of the market.