Question

The product is a normal product. Refer to the graph above to answer this question. What does the distance Ql to Q2 represent? Select one: A. The result of a decrease in income. B. An increase in the quantity demanded. C. A shortage at price Pl. D. A surplus at price Pl.

Answer 1

The distance Q1 to Q2 represents an shortage at price P1. The Option A.

A shortage in economics refers to a situation where the quantity demanded for a good or service exceeds its available supply, leading to a lack of sufficient supply to meet demand.

When the same price of goods cannot be used to buy the same quantity, this leads to greater quantity demanded as additional income will be required to buy it.

So, base on the graph, the distance Q1 to Q2 represents an shortage at price P1 because quantity demand increase despite the goods having the same price.

Therefore, the Option C is correct.