Price determination and market shifts

Signalling: a rising price tells producers that consumers want more, and tells consumers the good has become scarcer.
Incentive: a higher price makes producing more profitable, encouraging firms to expand and new firms to enter.
Rationing: a higher price discourages some buyers, so the scarce good goes to those willing and able to pay most.

Egg rationing: widely reported in the UK, November 2022. Diagrams drawn with Rough.js and perfect-freehand, both MIT licensed. Your answers are saved only on this device.