View FREE Lessons!

Definition of a Shortage:

A shortage occurs when the quantity demanded exceeds the quantity supplied.  Shortages occur at prices less than the equilibrium price.

Detailed Explanation:

A shortage results when the quantity supplied is less than the quantity demanded at a given price. Consumers will bid prices higher to provide suppliers a greater incentive to produce more. Shortages exist at all prices below the equilibrium price. For example, at a price of $6 per hour, parents may demand 38,000 babysitting hours, but sitters would only be enticed to provide 28,000 hours. In such a case, there would be a shortage of 10,000 hours. Some parents would struggle to find a babysitter and bid the price up to find someone to sit for their child. 

Search the Glossary

Market Overview:

Market quotes are powered by

Single Quote:

© 2018 Higher Rock Education and Learning, Inc. All rights reserved. No portion of this site may be copied or distributed by any means, including electronic distribution without the express written consent of Higher Rock Education and Learning, Inc.