How does a free market typically respond to eliminate a shortage?

A free market typically responds to eliminate a shortage by allowing the price to rise. When there is a shortage, it means that the quantity demanded exceeds the quantity supplied at the current price. In a free market, prices are determined by supply and demand dynamics.

As consumers compete for the limited goods available, the increased demand, compared to supply, exerts upward pressure on prices. As prices rise, it serves to signal to suppliers that they can earn more by increasing production. Higher prices can also reduce the quantity demanded, as some consumers may be deterred from purchasing at elevated prices. This interplay continues until the quantity supplied meets the quantity demanded, thus eliminating the shortage.

Thus, allowing prices to rise is a natural market mechanism that helps restore balance between supply and demand, effectively addressing the shortage situation.