Why Do Prices Go Up When There's a Shortage?

Prices go up when there's not enough of something. Imagine you're at a lemonade stand, and everyone wants lemonade, but the stand only has one cup left. You'll probably pay more for that last cup because it’s so desired. This is like what happens in real life: when people want more than what's available, prices increase.

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Examples

  1. When the last ice cream cone at the fair costs twice as much as usual.
  2. A popular toy becomes expensive because it’s sold out everywhere.
  3. Gas prices jump up when there's a big storm that blocks oil shipments.

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