When a shortage exists in a competitive market, the price provides incentives for Buyers to decrease the quantity of a good or service purchased to the market.
More about shortage:
In terms of economics, a shortage occurs when there is a discrepancy between the amount supplied and the quantity sought at the going rate.
Three factors primarily contribute to shortages: rising demand, falling supply, and government action. The term "scarcity" ought not to be confused with "shortage" as it is used in economics.
Command economies experience higher shortages. Here, the government refuses to let the forces of supply and demand determine the price of a good or service on the open market.
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