In a free market, what impact does a shortage have on producers?

1 answer:

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Usually a shortage will make a big impact on producers. It also depends on the type of shortage, if its a shortage of supply, they have to step up their production, but if they dont, prices will rise on the low amount of supply, eventually topping out until the demand starts to fall for that item. If the shortage is of resources, production will be slower if not halted as there will be too little to produce a good, and the previously mentioned supply shortage will happen. What many producers might do then, is try to force the resource supply back up, either by trying to contract people to get the supply going, or buying supply from places that arent having shortages.

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