When the supply of a commodity decreases, what typically happens to prices?

When the supply of a commodity decreases, prices tend to rise due to the basic principles of supply and demand. When there is less of a commodity available in the market, consumers still desire the same quantity or more of that commodity. This imbalance creates upward pressure on prices as buyers compete to obtain the limited supply.

As the amount of the commodity decreases, sellers may take advantage of the scarcity by raising prices, leading to a situation where consumers may have to pay more to secure the goods they want. This response helps balance the quantity supplied against the quantity demanded, ultimately influencing market prices.

Changes in demand, such as an increase or decrease, are related to consumer preferences and external factors, but in this scenario, the primary effect of a decrease in supply is the increase in prices, not a direct change in demand.