Firms can price their products below the market equilibrium price and engineer shortages in the market.

Question

Quizplus · Accepted Answer

When firms price their products below the market equilibrium price, it can lead to an increase in demand and a shortage in supply. This strategy is often used to create buzz and generate interest in a product or service, but it can also lead to frustration among consumers who are unable to purchase the item due to the shortage.

Firms Can Price Their Products Below the Market Equilibrium Price