Final answer:
Sellers increase the price in response to a shortage to move towards market equilibrium, adjusting prices based on the forces of supply and demand.
Step-by-step explanation:
Sellers will respond to the shortage by increasing the price of the good until the market reaches equilibrium.For example, if there is a shortage of gasoline, gas stations may raise the price per gallon to discourage buyers and incentivize suppliers to produce more gasoline. In conditions where the price is below the equilibrium, a shortage occurs because the quantity demanded exceeds the quantity supplied due to the lower price.
Sellers, such as gas stations and oil companies, see an opportunity to raise prices for higher profit, moving the price towards equilibrium. Conversely, when there's a surplus, meaning the price is above equilibrium, unsold goods accumulate, and sellers feel compelled to lower prices to increase sales and avoid losses. These price adjustments continue until the equilibrium price is reached where quantity supplied equals quantity demanded.