Shortages are important evidence that firms are exercising monopoly power.

Question

Quizplus · Accepted Answer

Shortages typically occur when the demand for a product exceeds its supply at a particular price, not necessarily because of monopoly power. They can happen in various market structures, including competitive markets, due to factors like production constraints, sudden increases in demand, or supply chain disruptions. Monopoly power is more about the ability to control prices and exclude competitors, not directly about creating shortages.

Shortages Are Important Evidence That Firms Are Exercising Monopoly Power