Shortage
Definition. A shortage is a situation in which the quantity demanded of a good exceeds the quantity supplied at the prevailing price, leaving some willing buyers unable to obtain it. It arises when the price is held below the equilibrium price, for example by an effective price ceiling.
In a free market a shortage puts upward pressure on price, which would raise quantity supplied and ration demand until the market clears. A binding maximum price prevents this adjustment and may lead to queues or rationing.
This term belongs to Price Controls: Ceilings and Floors in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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