When there is a shortage in a market:

Question

Quizplus · Accepted Answer

When there is a shortage in a market, the demand for the product or service exceeds the supply, leading to competition among buyers, which drives up prices. This upward pressure on price is due to the fact that consumers are willing to pay more to obtain the product or service they desire, while suppliers may be reluctant to increase their output due to increased production costs. Ultimately, prices rise until the market reaches a new equilibrium.

When There Is a Shortage in a Market