Which of the following best describes the impact of shortages in economics?

Shortages occur when the demand for a good or service exceeds the supply available in the market. This imbalance generally leads to increased prices as consumers compete to obtain the limited quantity available. When prices rise, it can incentivize suppliers to produce more of the good or service, but in the short term, the immediate effect is higher prices due to increased demand and limited supply.

Additionally, when a shortage is persistent, it often results in rationing, where goods or services are distributed in a controlled manner to avoid overconsumption and ensure that the limited resource is allocated in a way that can meet some level of demand.

Thus, the correct answer captures the dual impact of rising prices and the potential for rationing that arises in times of shortage. This understanding of market dynamics is crucial for recognizing how shortages affect economic behavior and market efficiency.