Question

A recent study determined that, at the current market price, there is a shortage of widgets in Pleasantville. If the market for widgets is allowed to adjust, the ultimate result will be: a. a decrease in price and an increase in the quantity supplied. b. an increase in price and an increase in the quantity supplied. c. a decrease in price and an increase in the quantity demanded. d. an increase in price and an increase in the quantity demanded.

Answer 1

The correct answer is letter "B": an increase in price and an increase in the quantity supplied.

Step-by-step explanation:

Shortages are the results of unmatched quantity supplied and quantity demanded. In such cases, by supply law, an increase in price would cost an increase in the quantity supplied. This will cause the quantity demanded to decrease thus as long as the quantity supplied increases and the quantity demand decreases there will be a point at which both of them will coincide at a certain price which will be the equilibrium point.

Answer 2

The answer is b. an increase in price and an increase in the quantity supplied.

Step-by-step explanation:

As shown in the diagram. The price will move to equilibrium, therefore price increases and quantity supplied increases.