text: what causes shortages and how can this be remedied?   shortages happen when supply cannot keep up with demand.  in the short run, if the firm can do so, it has to bump up production.  in the mean time, the price should increase to try and lower demand a little.  in the long run, if the firm still things there will be a shortage and they're making money on the product and it has the money, then it will expand to get larger production capacity.  basically, -increase supply, if possible -increase price