Question

If the demand for a certain toy was higher than expected and the demand curve shifted outward to the right, causing a shortage, then _____. A. there would be an eventual downward movement along the supply curve, reestablishing equilibrium B. the supply curve would eventually shift to the right, reestablishing equilibrium C. the supply curve would eventually shift to the left, reestablishing equilibrium D. there would be an eventual upward movement along the supply curve, reestablishing equilibrium

Gradpoint- D. there would be an eventual upward movement along the supply curve, reestablishing equilibrium

Answer 1

If the demand for a certain toy was higher than expected and the demand curve shifted outward to the right, causing a shortage, then there would be an eventual upward movement along the supply curve, reestablishing equilibrium.

Step-by-step explanation:

We have four options.

If the demand caused a curve to shift outwards towards the right, then we have a shortage, it means the "graph" should show the line as far to the right and going down, since a shortage means that there are less toys. Since we aren't using precise numbers, my graphs are theoretical, but it would look something like image one. The graph goes out to the right, then decreases. Now, lets see how each option affects the graph:

A) is drawn in red; it would just continue the decrease in production, not helping.

B) is orange; it makes it continue going out, not re-stabilizing it, as it is going to continue going down or stay too low.

C) is green; just like B), it's still too low.

D) is pink; in theory, the product may continue to go down or right or whatever, but through doing part D), it still stabilizes for some time, unlike the other options

Hope this helps! I'd recommend googling other answers just in case I'm wrong. :)

Answer 2

Answer: The correct answer is actually B. the supply curve would eventually shift to the right, reestablishing equilibrium. When there is a shortage in the market due to higher demand, the price of the toy will increase, leading to higher profits for the producers. This will incentivize producers to increase their supply of the toy, shifting the supply curve to the right until a new equilibrium is established where the quantity demanded equals the quantity supplied at a new higher price.

Step-by-step explanation: