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

Imagine you're selling candy at the school fair. If a lot of kids want candy but there's not enough, you can charge more because they’re all excited to buy it. That’s how prices go up when there's a shortage.

Maybe you're trying to decide how many pieces of candy to bring, and if you think more kids will come than usual, you might bring fewer candies on purpose so that you can sell them for a bigger price later. It's like when you want something really bad, you’re willing to pay more for it, and people who know this might try to make things even rarer just to get even more money! Maybe you're trying to decide how many pieces of candy to bring, and if you think more kids will come than usual, you might bring fewer candies on purpose so that you can sell them for a bigger price later. It's like when you want something really bad, you’re willing to pay more for it, and people who know this might try to make things even rarer just to get even more money!