Shortage Economics 2019-11-25 08:00:00

Shortage Economics

A shortage is created when the demand for a product is greater than the supply of that product. There are three conditions that can create a shortage:

- Increase in demand — occurs when consumers suddenly demand more of a product. 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.
- Government intervention — a government can impose a cap on prices (i.e., a price ceiling), allowing more people to buy a good than would be realized in a free market.


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