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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:

Sagot :

Parrainidn

Answer: b. an increase in price and an increase in the quantity supplied

Explanation:

According to the law of supply and demand, when the supply of a good is low, the price should be high to reflect this scarcity. In this case, the supply of widgets is low, hence the shortage.

If the market was able to freely adjust, the price of widgets would increase to reflect this shortage. When supplies see this increase, they will increase their supply so as to earn more profits.

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