What happens to the price of a good or service when a shortage of that good or service occurs?

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What will happen to price if the good or service is in shortage?

If there is a decrease in supply of goods and services while demand remains the same, prices tend to rise to a higher equilibrium price and a lower quantity of goods and services.

What happens to price in a shortage?

The price will rise until the shortage is eliminated and the quantity supplied equals quantity demanded. In other words, the market will be in equilibrium again.

price good service shortage service occurs Higher prices generally

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