The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production.

PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.

To argue that every possible choice to both produce and conserve toilet paper is incentivized at $1.68 is an extraordinary claim. Almost all supply and demand curves don't have cliffs. And without extraordinary knowledge of toilet paper manufacturing and consumption how would you know this cliff exists at $1.68 per roll.

How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too.

People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.

Though I believe you would not work overtime for double time, I also believe that an enormous number of people would do so.