Question

If a business owner becomes aware of a shortage in the market for the good or service he or she produces, which is he or she likely to do?a. lower the price and increase the quantity supplyb. raise the price and increase the quantity supplyc. lower the price and reduce the quantity supplyd. raise the price and reduce the quantity supply

Answer 1

Answer: Option(d) is correct.

Step-by-step explanation:

Business owner must raise the price of the goods he produce and lowers the quantity supply if there is a shortage in the market for the goods.

The seller takes advantage of this situation by raising the prices as there are more demand for the product than the supply of that product. So, firms takes higher prices for the lower quantity goods.

Hence, in order to increase business profit in this situation of an economy, by rising prices and selling lesser quantity.