1. Some firms and their products face intensively competitive markets while other firms and their products have little to no effective competition. Explain why this condition may exist, which economic models describe both situations, and give examples to support your answer.
2. Economic theory generally holds that in competitive markets price is a function of demand and supply. Describe and give an example of the effect of a shortage of supply as opposed to a shortfall in demand. What would you do as a business manager meeting a mismatch between your supply and customers demand?