Answer to Question #115913 in Microeconomics for simran

Question #115913
Explain the effect of a shortage on prices.
1
Expert's answer
2020-05-17T18:24:22-0400

In economic terms a shortage is a condition when the quantity demanded is greater is greater than the quantity supplied at a market price. The main effect of a shortage is increase of prices of goods. The second effect is that demand for substitute goods increases. Shortage also makes consumers to queue more to buy the limited goods.


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