Question

In the presence of​ shortages, why would a​ firm, such as a restaurant with people waiting for a table or a theater with people waiting for a​ ticket, not raise prices when doing so would seem to increase​ profits?

Answer 1

This might be seen by customers as trying to take advantage of them. In addition, this might lead to short-run profits, but the bad publicity this could lead to might lead to long-run losses that the company may not be able to recoup.