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.
Analogy
Imagine you're at a popular concert where there are more people wanting tickets than there are available seats. The shortage happens when there aren't enough tickets for everyone who wants one, causing some people to miss out on the opportunity.
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.
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