Answer to Question #105958 in Microeconomics for Osama Khan

Question

Economists usually think of persistent shortages being caused by some interference with the market mechanism. Ask the class if they can think of free markets that experience shortages. There are numerous examples, but one that most will understand is tickets to a hot concert. These tickets are often priced below equilibrium. One reason is to create “buzz” about the event. Some bands claim they keep ticket prices low to be fair to their fans. Ask the class who gains and who loses when the price is set below equilibrium. This can lead to a discussion of the value different people place on their time. Question: Name two other industries or markets where shortages appear to be created for publicity and marketing purposes.

Answer 1

1. training in rare foreign language courses. in the first months, a teacher can charge people a low fee so that they get used to the lessons.

2. opened a new cafe with unusual pastries and napiki. they can offer products at low prices to introduce new flavors of coffee and pastries to customers.