Shortage

Definition

A shortage occurs when the quantity demanded of a good or service exceeds the quantity supplied, resulting in an imbalance in the market. This leads to scarcity and can cause prices to rise.

Related terms

Surplus: A surplus is the opposite of a shortage, where the quantity supplied exceeds the quantity demanded. It results in excess supply and can lead to lower prices.

Equilibrium: Equilibrium is a state of balance in the market where the quantity demanded equals the quantity supplied. There is no shortage or surplus at this point.

Price ceiling: A price ceiling is a government-imposed maximum price that can be charged for a good or service. It may lead to shortages if set below equilibrium price.