Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound.

Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?

a. There is a shortage, so the price rises and the quantity demanded decreases.

b. There is a shortage, so the price rises and the quantity demanded increases.

c. There is a shortage, so the price falls and the quantity demanded increases.

d. There is a surplus, so the price falls and the quantity demanded increases.

 

Option a. There is a shortage, so the price rises and the quantity demanded decreases is correct

This option is correct because in the case of shortage there exists excess demand in the market such that the quantity demanded exceeds that the quantity supplied for a product. It means the price rises such that the quantity demanded falls in such a manner that the equilibrium is restored.

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