Assume there is a decrease in the supply of a product produced in a perfectly competitive market.All else constant,in the short run this will cause the profits of firms that produce substitutes for the good in question to increase.

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A decrease in supply of a product in a perfectly competitive market will result in an increase in the market price of the product. This increase in price will lead to an increase in profits for firms producing substitutes for the good in question, as consumers who are unable to purchase the original product will turn to substitutes instead. However, in the long run, new firms may enter the market and increase competition, bringing prices back down and reducing profits.

Assume There Is a Decrease in the Supply of a Product