How to Calculate a Shortage
A shortage equals quantity demanded minus quantity supplied at the going price: shortage = Qd − Qs, and it appears only when price sits below equilibrium.
The Shortage formula
Calculator
Enter both equations and the price the market is held at to get Qd, Qs and the shortage between them.
The a in Qd = a − bP.
Enter b as a positive number.
The c in Qs = c + dP.
A shortage appears only when this price sits below equilibrium.
Buyers want 25 more units than sellers offer at $11, so the market is short by that much.
- Quantity demanded at that price
- 57
- Quantity supplied at that price
- 32
- Equilibrium price
- $16
- Equilibrium quantity
- 42
- Market condition
- Shortage
Substitute the held price into the demand equation to get Qd.
Substitute the same price into the supply equation to get Qs.
The price the market would settle at on its own, with no legal cap.
How to calculate Shortage, step by step
- 1Identify the price in question. Use the price the market is held at, such as a binding price ceiling or a legally fixed price.
- 2Find quantity demanded at that price. Substitute the price into the demand equation, or read Qd straight off the demand curve.
- 3Find quantity supplied at that price. Substitute the same price into the supply equation, or read Qs off the supply curve.
- 4Subtract and label the units. Shortage = Qd − Qs. A negative answer means the price is above equilibrium, so the market has a surplus instead.
Worked example: Shortage
In a market where Qd = 90 − 3P and Qs = 10 + 2P, equilibrium is P = $16 with Q = 42. At a legal price of $11, Qd = 90 − 3(11) = 57 and Qs = 10 + 2(11) = 32, so the shortage is 57 − 32 = 25 units.
Shortage questions
What causes a shortage?
A price held below equilibrium causes a shortage, because the low price raises quantity demanded and lowers quantity supplied at the same time.
Is a shortage the same as scarcity?
No. A shortage is a gap at one particular price, while scarcity is the permanent condition that wants exceed the resources available to satisfy them.
How does a free market clear a shortage?
The price rises, which reduces quantity demanded and raises quantity supplied until the gap closes at the equilibrium price.
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