Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Short-run supply increases lead to lower prices and higher quantity, while long-run supply adjusts quantity without affecting prices.
B
Short-run supply increases lead to higher prices due to increased demand, while long-run supply decreases prices as production costs fall.
C
Both short-run and long-run supply shifts result in the same price adjustments in the market.
D
Short-run supply shifts have no impact on market equilibrium, only long-run adjustments do.
Understanding the Answer
Let's break down why this is correct
Answer
In economic recovery, a shift in short-run supply means that businesses can quickly change how much they produce in response to demand. For example, if a store sees more customers after an economic boost, it might increase its stock of popular items immediately. This change can lead to a temporary rise in prices if demand outpaces supply, which creates a new market equilibrium where prices are higher and quantity sold is increased. However, in the long run, supply adjustments take more time, and businesses can invest in more resources to produce goods more efficiently. This can lead to a more stable equilibrium where prices eventually stabilize, and the market can better meet consumer needs without sharp price fluctuations.
Detailed Explanation
When short-run supply increases, it means more products are available. Other options are incorrect because This answer confuses supply and demand; This answer suggests both supply shifts act the same way, which isn't true.
Key Concepts
Market Equilibrium
Economic Growth
Short-run vs. Long-run Supply
Topic
Economic Recovery and Supply Shifts
Difficulty
hard level question
Cognitive Level
understand
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