Shortage

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A shortage is the excess in quantity demanded above the quantity supplied. This occurs when the seller used a price that was below the market equilibrium price. When the seller increases its price, fewer consumers will buy the good and the shortage will disappear.

In the example of the imaginary goods of "widgets", when demand for a widget at a given price exceeds supply, there is a shortage. A shortage tends to drive the price of the widget up.

If there is a "price control" or government law prohibiting the seller from raising the price, then the shortage will persist.

See also