In a theoretical world, with instant market reactions, instant transportation, and perfect price and supply information, yes. In the real world, no.

1. The absolute supply of toilet paper on a long-term timescale will not increase.

2. The cost of increasing manufacturing capacity may not be worth the increased revenues from selling into a two-week shortage.

3. There's a lag time. By the time you increasing manufacturing capacity, and get paper into groceries, the demand curve would have flattened out.

4. There isn't an actual shortage, there are some very localized shortages, which will get smoothed out once supplies sitting in warehouses get to store shelves. Nobody in Mexico increases toilet paper manufacturing capacity because the corner store across my apartment is out. Nobody working in grocery logistics is going to be calling people in to work overtime to deal with this, either.