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Shortage (view source)

Revision as of 01:46, April 9, 2007

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When [[Demand|demand]] for a [[Widget|widget]] at a given price exceeds [[Supply|supply]], there is a shortage.  A shortage tends to drive the price of the widget up.
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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. 
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In the example of the imaginary goods of "widgets", when [[Demand|demand]] for a [[Widget|widget]] at a given price exceeds [[Supply|supply]], there is a shortage.  A shortage tends to drive the price of the widget up.
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If there is a "price control" or government law prohibiting the seller from raising the price, then the shortage will persist.
    
[[Category:Economics]]
 
[[Category:Economics]]
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