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Because the less there is of something --- the "rarer" it is, which puts more demand on it from customers. The higher demand caused by the low quantity supply naturally causes prices to go up.

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Related Questions

At equilibrium price the quantity is demanded always equal to the quantity supplied?

Yes, the equilibrium price equates the quantity supplied to the quantity demanded.


How does the quantity supplied change as the price increases?

As the price increases, the quantity supplied also increases. This is known as the law of supply, which states that there is a direct relationship between price and quantity supplied.


When does law of supply occur?

When price rises, the quantity supplied rises; as price falls, the quantity supplied falls.


What is a measure of the way quantity supplied reacts to a change in price?

It is Price Elasticity of Supply. It is defined as the ratio of a percentage change in quantity supplied to the percentage change in price (which brought about the change in quantity supplied).


The measure of the way quantity supplied reacts to change in price is?

It is Price Elasticity of Supply. It is defined as the ratio of a percentage change in quantity supplied to the percentage change in price (which brought about the change in quantity supplied).


What is the measure of the way quantity supplied reacts to change in price?

It is Price Elasticity of Supply. It is defined as the ratio of a percentage change in quantity supplied to the percentage change in price (which brought about the change in quantity supplied).


The upward slope of the supply curve reflects the?

fact that price and quantity supplied are inversely related


What is the price called at which the quantity demanded is equal to the quantity supplied?

equilibrium price


When quantity demanded is greater than quantity supplied the price will?

the price increase


A shortage develop when?

The equilibrium quantity supplied is lower than the actual quantity supplied. The market price is below the equilibrium price.


How does quantity supplied of a good with a large elasticity of supply react to price change?

It will be very sensitive to price change. A change in the price will change the quantity supplied by a factor greater than 1. ps: Price elasticity of supply= (% change in quantity supplied)/(% change in price)


If the price is less than the equilibrium price what is the relatiionship of quantity supplied to quantity demanded?

If the price is low, suppliers may well not wish to supply the full quantity that is demanded by consumers.The quantity demanded and quantity supplied determines the equilibrium price in the market. The quantity where these two are equal, that is where the market price is set.