Large shortages can develop quickly when the market price is well below the equilibrium level. When the product sells out quickly retailers will immediately order more from the supplier. In severe shortages impatient consumers may offer retailers a bonus if they can find the out-of-stock item. Retailers, frustrated by lost sales and unhappy customers, may offer the producer additional payments to be the first firm to receive new shipments. These events signal to everyone concerned that the price can be increased without hurting sales.

The size of the shortage shown on the graph to the right is Q_D - Q_S. As the market price rises the size of the shortage decrease. Nevertheless, as long as there is any shortage at all, there will be upward pressure on the market price. Only when the price reaches P_E will the market be in equilibrium. With neither a shortage nor a surplus, there is no pressure on the market price to change, so long as other factors which affect demand and supply, remain fixed.