When there is a shortage of a good, consumers eventually give up trying to buy, so the demand for the good declines, and the price falls until the market is finally in equilibrium.

Question

Is this true or false? And why?

In: Economics

Answer 1

well, if the supply cant match the demand then people have to go without, and the more they realize you cant get the required goods, then the interest for it goes down in favor of alternatives.

if there are no alternatives then the prices remain high until supply can match,this is a problem if companies try to abuse this; ie: a good they know people HAVE to get, this is called an “artificial shortage” and in most cases if proven can be a legal suicide for the companies responsible.