Unformatted text preview: There is a shortage of a good or service when the quantity demanded exceeds the quantity supplied. In this situation, either buyers will offer more than the prevailing price or sellers will realize that they can charge higher prices This bidding up of prices happens whenever there are shortages—and there will be shortages whenever the price is below its equilibrium level The market price will always rise if it is below the equilibrium level Using Equilibrium to Describe Markets The market price always moves toward the equilibrium price, the price at which there is neither surplus nor shortage...
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- Fall '07
- Microeconomics, equilibrium level