7 Question 6Part II: Short problemsIn standard economics, markets are always in balance (equilibrium), meaning that in amarket where prices can be easily adjusted, there are never any shortages. But this is not alwaystrue, e.g., hardware stores often face a shortage of snow shovels the day after a blizzard.To understand why this happens, a survey was conducted with the following question:"A hardware store has been selling snow shovels for $15. The morning after a large snowstorm, thestore raises the price to $20. Please rate this action as:Acceptable, or, Unfair"In this example, 82 percent of respondents (N=107) considered it unfair for the hardware store totake advantage of the short-run increase in demand associated with a blizzard. A majority of store-owners explained they already understood this, and this constrained their pricing behavior.If you believe in rationality, would you see anything wrong with this response? How can you usethis response to explain the existence of 'shortages'?

If the quantity demanded and the quantity provided is equal at the market price, the market is in…

Part II: Short problems In standard economics, markets are always in balance (equilibrium), meaning that in a market where prices can be easily adjusted, there are never any shortages. But this is not always rue, e.g., hardware stores often face a shortage of snow shovels the day after a blizzard.

Part II: Short problems In standard economics, markets are always in balance (equilibrium), meaning that in a market where prices can be easily adjusted, there are never any shortages. But this is not always rue, e.g., hardware stores often face a shortage of snow shovels the day after a blizzard.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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