For any general profit-maximizing firm with market power (i.e., a price-setting firm, such as Microsoft, Toyota, or Starbucks), why do we NOT expect to see on an ongoing basis shortages of goods or services provided by these firms? Explain briefly.
Shortage of goods in a profit maximizing firm is very rare because these firms have put in place systems that are very efficient. After all, a profit maximizing firm wants to have products ready when customers need them and at the time the products are need. In short, they have a very well designed just-in-time systems. Besides, these companies ...
This solution gives reasons why profit-maximizing firms such as Microsoft, Toyota, and Starbucks rarely short supply of goods to markets.