1
$\begingroup$

Laymen often talk about “shortages” in the economy. But is there an accepted definition of what a “shortage” is from the perspective of economics as a science?

$\endgroup$
5
  • $\begingroup$ Hi! Can you please explain what you mean by "accepted definition"? $\endgroup$
    – Giskard
    Aug 17, 2023 at 7:36
  • $\begingroup$ Hi @JonathanReez. Shortage is not a term used in the typical textbook, I wouldn't imagine. But it is pervasive nevertheless. It's most commonly used to characterise the compound effect of: (1) excess demand for a good/service/production input, often in conjunction with (2) inelastic supply of some good/service/input. $\endgroup$
    – EB3112
    Aug 17, 2023 at 8:39
  • $\begingroup$ @EB3112 what are you talking about? Term shortage is used in every economics textbook, what textbook you used that did not mentioned it? Every textbook I know mentions shortages when discussing price floors which is part of core 101 economics $\endgroup$
    – WilliamT
    Aug 17, 2023 at 17:51
  • $\begingroup$ Hi @WilliamT. If I mispoke regarding the frequency of 'shortage' used in undergrad texts, then I apologise to the OP. However, my comment is not only consistent with your own answer, but consistent too with Mankiw who refers to shortage as `excess demand.' So, you caught me: I don't cradle my copy of Mankiw in bed at night like you do. But, my original comment was nevertheless informative to the OP. There are counterexamples (a copy of a textbook in front of me) does not mention the word shortage once, yet mentions excess demand 23 times. andrewclausen.net/teaching/econtheory.pdf $\endgroup$
    – EB3112
    Aug 17, 2023 at 21:28
  • $\begingroup$ @EB3112 I do not cradle economic textbooks in bed either, but I wanted to correct the record $\endgroup$
    – WilliamT
    Aug 18, 2023 at 19:16

1 Answer 1

1
$\begingroup$

Shortage is in economics textbooks defined as the positive difference between quantity demanded and quantity supplied. If the difference is negative it will be called surplus.

shortage: $Q_d - Q_s >0$

surplus: $Q_d - Q_s <0$

This is how I saw it defined in every economics textbook I ever used. For example, Soloman's Economics, or Mankiw's Principles.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.