Slightly pedantic point: A shortage is a market failure where you have willing parties who want to transact (a guy wants to sell at $10 and someone wants to bu

Slightly pedantic point: A shortage is a market failure where you have willing parties who want to transact (a guy wants to sell at $10 and someone wants to buy at that price) but for whatever reason they can't. For shortages in particular, there are more buyers than sellers (surplus is the reverse condition). The price might normally rise but it can't. The failure to transact is the first-order condition. That prices can't rise are sometimes a cause or effect, depending on the situation. But the main thing is that you have people who want to transact who can't. Shortages often happen due to price controls. Say I want to sell my house. I won't take $100K for it but I will take $200K. You are fine paying $200K. A rule is made that no houses can be sold for more than $150K. We both are fine with $200K but I can't sell my house because I won't accept $150K for it. So we don't transact. The sale doesn't happen, even though we both want it to. In the long run, producers don't bother producing because their upside is capped. That usually makes things worse: not only can the price not rise, but the market becomes systematically undersupplied. But that's a follow-on effect, not the "shortage" per se. You are completely correct that this (a shortage) is a highly technical condition that doesn't correspond to the common use of this term, something like "it costs more than I want to pay".