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Assume the equilibrium price for a good is $10. If the market price is $5, a:_____________

a. Shortage will cause the price to remain at $5
b. Surplus will cause the price to remain at $5
c. Shortage will cause the price to rise toward $10
d. Surplus will cause the price to rise toward $10

Respuesta :

Answer:

c. Shortage will cause the price to rise toward $10

Explanation:

c. Shortage will cause the price to rise toward $10

The equilibrium price is $10 this any price below the equilibrium price will create a shortage in the market because at price lower than equilibrium price, the demand is greater than the supply. Thus, shortage will push the prices upwards or towards equilibrium price.

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