In San Francisco shops are running out of paper products and food. In Dallas builders report a scarcity of windows, bricks and appliances. In Chicago manufacturers say they are short of aluminum, steel, copper, plastics, paints, pallets, paper, glue and microchips.—The Economist
How did the quantity and price of microchips change in 2021? Which had the larger percentage change?
This data table provides an answer.
Both the quantity and price of microchips increased in 2021. The quantity increased by 13 percent and the price rose by 8.5 percent, so the quantity had the larger percentage increase.
How does a shortage arise in a market and how is it eliminated?
A shortage arises in a market when demand increases or supply decreases and the price has not risen by enough to restore market equilibrium. When a shortage arises, buyers are willing to pay a higher price than sellers are willing to accept, so the price rises and eliminates the shortage.
Is the outcome in a market efficient when there is a shortage?
The following figure answers this question.
Is the outcome in a market efficient when a shortage is eliminated?
The following figure answers this question.
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