Question 9

The quantity supplied is less than the equilibrium quantity.

A market shortage occurs when the quantity supplied of a good or service is less than the quantity demanded at a given price level, indicating that not enough of the product is available to meet consumer demand.

A) The quantity demanded is less than the equilibrium quantity.

This option is incorrect because a market shortage specifically involves a situation where the quantity demanded exceeds the quantity supplied, not the other way around. In fact, if the quantity demanded is less than the equilibrium quantity, it would indicate a surplus rather than a shortage.

B) Price is greater than equilibrium price.

This statement is also incorrect. When the price is above the equilibrium price, a surplus occurs as the quantity supplied exceeds the quantity demanded, leading to excess inventory rather than a shortage.

C) The quantity supplied is less than the equilibrium quantity.

This option correctly describes a market shortage. In this scenario, demand outstrips supply, resulting in consumers being unable to purchase enough of the good at the current price, which is characteristic of a shortage.

D) There is downward pressure on the price.

This option is incorrect in the context of a shortage. Typically, a shortage creates upward pressure on prices because suppliers can raise prices due to high demand and low supply. Downward pressure on price would indicate a surplus situation.

Conclusion

The correct answer, "The quantity supplied is less than the equilibrium quantity," accurately reflects the definition of a market shortage, where demand surpasses supply. All other options either incorrectly describe the dynamics of supply and demand or pertain to surplus conditions, highlighting the unique characteristics of a shortage situation.