Polish meat shop in the 1980s.

Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus. Wikipedia does not have an article with this exact name. ... Wikipedia does not have an article with this exact name. ... In economics and marketing, a service is the non-material equivalent of a good. ... Look up Market in Wiktionary, the free dictionary. ... Surplus means the quantity left over, after conducting an activity; the quantity which has not been used up, and can refer to: budget surplus, the opposite of a budget deficit economic surplus Surplus product or surplus value in Marxian economics physical surplus in the economic theory of Piero Sraffa Operating...

Economic shortages are related to price—when the price of an item is "too low," there will be a shortage. In most cases, a shortage will compel firms to increase the price of a product until it reaches market equilibrium. Sometimes, however, external forces cause more permanent shortages—in other words, there is something preventing prices from rising or otherwise keeping supply and demand unbalanced. In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... It has been suggested that The Firm be merged into this article or section. ...

In common use, the term "shortage" may refer to a situation where most people are unable to find a desired good at an affordable price. In the economic use of "shortage", however, the affordability of a good for the majority of people is not an issue: If people wish to have a certain good but cannot afford to pay the market price, their wish is not counted as part of demand.

Effects

In the case of government intervention in the market, there is always a trade-off, with positive and negative effects. For example, a price ceiling may cause a shortage, but it will also enable a certain portion of the population to purchase a product that they couldn't afford at market costs. Economic shortages are generally seen as undesirable since they lead to economic inefficiency. In absence of a price mechanism, resources are less likely to be distributed according to people's utility. Higher transaction costs and opportunity costs (e.g., in the form of lost time) also mean that the distribution process is wasteful. Both of these factors contribute to a decrease in aggregate wealth. In economics, utility is a measure of the relative happiness or satisfaction (gratification) gained by consuming different bundles of goods and services. ... In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange. ... Opportunity cost is a term used in economics, to mean the cost of something in terms of an opportunity foregone (and the benefits that could be received from that opportunity), or the most valuable foregone alternative. ...

More generally, regardless of their cause, shortages may result in:

• Black markets - illegal markets in which products that are unavailable in conventional markets are sold, or in which products with excess demand are sold at higher prices than in the conventional market.
• Artificial controls on demand, such as rationing.
• Non-monetary bargaining methods, such as time (for example waiting in line), nepotism, or even violence.
• Price discrimination
• The inability to purchase a product.

The black market or underground market is the part of economic activity involving illegal dealings, typically the buying and selling of merchandise or services illegally. ... Rationing is the controlled distribution of resources and scarce goods or services: it restricts how much people are allowed to buy or consume. ... Queue at US Air Force station in Iraq, for food at a birthday celebration. ... Wikiquote has a collection of quotations related to: Nepotism This article or section does not cite its references or sources. ... Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. ...

Examples

• In the former Soviet Union during the 1980s, prices were artificially low by fiat (i.e., high prices were outlawed). Soviet citizens waited in line (or "queued") for various price-controlled goods and services such as cars, apartments, or some types of clothing. From the point of view of those waiting in line, such goods were in perpetual "short supply"; some of them were willing and able to pay more than the official price ceiling, but were legally prohibited from doing so. This method for determining the allocation of goods in short supply is known as "rationing".

• In the United States one of the most extreme examples of economic shortages are those caused by price ceilings on recreational drugs such as cocaine, heroin, and marijuana. Government enforced prohibition effectively establishes a price ceiling of negative infinity; it is illegal to buy or sell these goods at any price. At the legally enforced price of negative infinity, consumers face a shortage of legal cocaine. They opt for legal cocaine's best substitute, illegal cocaine, and resort to illegal transactions at prices higher than the ceiling. The shortage in this case prevails only within the legal market; the black market in fact clears at black market prices.

Other examples of economic shortages include: The 1980s refers to the years of 1980 to 1989. ... Rationing is the controlled distribution of resources and scarce goods or services: it restricts how much people are allowed to buy or consume. ... Recreational drug use is the use of psychoactive drugs for recreational rather than medical or spiritual purposes, although the distinction is not always clear. ... For other uses, see Cocaine (disambiguation). ... Heroin, also known as diamorphine (BAN) or diacetylmorphine (INN), is a semi-synthetic opioid. ... A Cannabis sativa plant The drug cannabis, also called marijuana, is produced from parts of the cannabis plant, primarily the cured flowers and gathered trichomes of the female plant. ...

• 1973 oil crisis, during which long lines and rationing were used to control demand.
• Prohibition, which resulted in the creation of a black market for liquor.

Whether an economic shortage of a certain good or service is beneficial or detrimental to society often depends on one's ethical and political views. For instance, consider the shortage of recreational drugs discussed above, and the controversies around the use of such drugs. Likewise, consider the economic shortage of cars in the Soviet Union during the 1980s: On the one hand, people had to wait in line to buy a new car; on the other hand, cars were more affordable than they would have been at market prices. At the height of the crisis in the United States, drivers of vehicles with odd numbered license plates were allowed to purchase gasoline only on odd-numbered days of the month, while drivers with even-numbers were limited to even-numbered days. ... The term Prohibition, also known as Dry Law, refers to a law in a certain country by which the manufacture, transportation, import, export, and sale of alcoholic beverages is restricted or illegal. ... Spirits redirects here. ... Ethics (from the Ancient Greek ethikos, meaning arising from habit), a major branch of philosophy, is the study of value or quality. ... Politics is the process by which groups make decisions. ...

See also

• Wood gas generator

This article or section does not cite its references or sources. ...

References

• Alchian, Armen A.; Allen, William R.. Exchange and Production: Competition, Coordination, and Control. ISBN 0-534-01320-1.