Chapter 7.4, Problem 2R

To determine

To create: a diagram to show the effect on prices if there is shortages and surplus in the market.

Explanation of Solution

  

Economics Concept Introduction

Introduction:

Shortage is regarded as a situation where the goods pr service are not in adequate quantity to satisfy the ongoing demand of consumers whereas the surplus is just the opposite of shortage. Surplus is a situation where the quantity of goods and services are more than required. So, both the situations are not apt for the economy.