"Intel Corp.’s INTC 1.15% new chief executive said a global chip-supply shortage could stretch two more years". (WSJ, April 2021) Here are questions.- Are chips scarce?
- Does a shortage of chips exist?
- What is the difference between a shortage and scarcity?
- If a shortage exists, why doesn't an increase in price eliminate it?
- What is the difference between the short run and the long run?
- In which time periods, the short or long runs, can firms "put more capacity on the ground"?
- Are the manufacturers earning more than a normal rate of return?
- If firms are not earning more than a normal rate of return, why does Intel want to increase capacity?
- Could automobile manufacturers have avoided shutting down by paying a premium to purchase the chips they need to maintain production?
- Why would automobile manufacturers shut down instead of paying a premium to purchase the chips they need to maintain production?
