12. What happens as a result of a shortage? a. There is downward pressure on prices. b. There is upward pressure on prices. c. Consumers begin to view the good as an inferior good because they have a hard time finding it. d. Supply of the good decreases.

Question

Xiomara Mullins

Business

6 October, 08:43

12. What happens as a result of a shortage? a. There is downward pressure on prices. b. There is upward pressure on prices. c. Consumers begin to view the good as an inferior good because they have a hard time finding it. d. Supply of the good decreases.

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Antony Solis · Answer 1

Option C There is upward pressure on prices

Explanation:

The reason is that the price and supply are inversely proportional to each other. If the supply increases the prices of the product will decrease. This means that the product will increase its value if the supply of the product gets lower. Also note that the price moves upward to reach equilibrium for a level of supply. It means if the product prices increases then the supply shortage will be lowered as a result nobody will buy the product. So the supplier will have to lower price that the consumer will be willing to pay to the supplier.