Limited supply and consequential rise in price Any type of shortage of supply in the market will lead to a situation of unmet demand and reduced supply in the market. Deficiency of supply situation will shift the supply curve towards the left. Now at the current prices the demand will be more than that of supply available in the market. To make the equilibrium possible in market, prices will have to be adjusted so that demand is equal to supply. Prices will be increasing in such a case.
The initial situation is where the milk, food and grocery market is in equilibrium at E0. The price is P0. When the supply related issues will start in the market, supply curve shifts to S1. In such a case the price rises to P1 and Quantity falls to Q1. This is the reason that price is expected to rise in United States. The deficient supply situation will lead to rising prices in the market. Quantity will fall and demand will adjust to changing prices
Limited supply and consequential rise in price There is a wide list of reasons which explain the shift in the supple curve. For instance, if the cost of producing any particular commodity (which is in turn related to multiple other factors) observes a rise, the supply curve will shift inward as in the graph above, increasing the price and decreasing the demand. Another reason is, if the price of alternative goods fall, the demand for a particular commodity will fall because the users might switch to the alternative product which he or she can procure at a lesser price. Similarly, price of complementary goods affect the supply curve, any change in the price of complementary goods will shift the supply curve, with price increasing with the price of complementary goods, and decreasing with the price of complementary goods. For example, the case of Automobiles and Fuel cost can be quoted, as the fuel prices go down, increased sales of automobiles is seen, and vice-versa. Not to mention, there are also natural factors which affect the price of a commodity, like weather, etc. expected demand of a product pushes the supply curve to either of the direction, with the supple curve shifting outward if more demand is anticipated, and inwards is lesser demand is expected in time. Technological change also changes the supple curve, though only in a positive direction, for there cannot be technological degradation, but the technology does get better over time, allowing increasing efficiency and faster and better production techniques.
To sum up, many factors, some of the not even accounted for, create a shortage in supply thus forcing a rise in the price shifting the supply curve. The demand falls and adjusts to the corresponding rise in the price again falling back into a state of equilibrium.