What causes a shortage?
A shortage is a condition where the quantity demanded is greater than the quantity supplied at the market price. There are three main causes of shortage—increase in demand, decrease in supply, and government intervention. Shortage, as it is used in economics, should not be confused with "scarcity."
What causes a shortage quizlet?
A shortage is caused when a products price is lower than the market equilibrium price. The possible solutions are discouraging demand for the product, increasing the supply of the product, or allowing the price to rise to the equilibrium level.
Where do shortages occur?
Definition of Shortage and Scarcity A shortage occurs whenever quantity demanded is greater than quantity supplied at the market price. More people are willing and able to buy the good at the current market price than what is currently available. When a shortage exists, the market is not in equilibrium.
What causes shortages and surpluses to occur?
A surplus exists when the price is above equilibrium, which encourages sellers to lower their prices to eliminate the surplus. A shortage will exist at any price below equilibrium, which leads to the price of the good increasing.
What are shortages in economics?
In economic terms, shortages occur when the quantity demanded exceeds the quantity supplied. To be at market equilibrium, the quantity supplied must match the quantity demanded, so when this is not the case, it either results in a surplus or a shortage.
What is an example of shortage?
For example, demand for a new automobile that a manufacturer cannot fulfill. – Decrease in supply — occurs when the supply of a good drops. For example, a virus among pigs means many of them must be euthanized, creating a shortage of pork products.
What is a shortage quizlet?
What is Shortage? A market condition existing at any price where the quantity supplied is less than the quantity demanded.
What is example of shortages?
In everyday life, people use the word shortage to describe any situation in which a group of people cannot buy what they need. For example, a lack of affordable homes is often called a housing shortage.
What are some examples of shortage?
For example, demand for a new automobile that a manufacturer cannot fulfill. – Decrease in supply — occurs when the supply of a good drops. For example, a virus among pigs means many of them must be euthanized, creating a shortage of pork products.