Final answer:
When demand for toilet paper increases and producers can meet this demand by increasing supply, equilibrium quantity sold increases, and price may remain stable if the supply rise matches the demand increase. If the supply cannot increase proportionally due to input scarcity or production costs, the equilibrium price rises.
Step-by-step explanation:
When the demand for toilet paper increases, thereby causing a shift in the demand curve to the right, the market will move towards a new equilibrium where the equilibrium quantity sold increases. If producers are able to meet this increased demand, as seen in graphical models where the supply curve shifts rightward (from S1 to S2), the quantity sold rises while the equilibrium price may stay constant if the supply increase matches the demand increase. This situation can occur under circumstances such as new technology or economies of scale that enable producers to increase supply without increasing costs significantly. Conversely, if the increase in supply does not match the increased demand, input scarcity or rising wages can cause the equilibrium price to rise as well.
Drawing parallels from supply and demand theory, when consumers buy more toilet paper, producers have the incentive to produce more due to higher potential profits. This is sometimes referred to as producer surplus, which is the amount a seller is paid for a good minus the seller's actual cost. However, if producers are unable to increase their supply due to factors like scarcity of inputs or increased production costs, the equilibrium price will tend to go up.