That seems to me like a strange, limited, and impractical definition of a shortage.
When the supply of something is insufficient to support effective operation (or to support existing life), that's a shortage.
Yes, perhaps prices will rise until no more people can afford it than the supply will support. But perhaps that supply isn't enough to keep the industry from collapsing or to keep the population from collapsing, etc.
Regardless of whether the price rises to keep the resource out of the hands of everyone who needs it, the insufficient supply for effective function is still damaging - to a population, an industry, an economy. I would most definitely consider that a shortage.
> That seems to me like a strange, limited, and impractical definition of a shortage.
Well, that's its definition, for better or worse. I didn't write the economics dictionary. I only can repeat it.
Is there reason to overload this particular word? While the implications of the scenarios you describe are clear, I'm not sure why it has to be "shortage" that represents it. Why not another word or term that encompasses those cases – unaffordable, perhaps – while leaving shortage to mean what it means?
When the supply of something is insufficient to support effective operation (or to support existing life), that's a shortage.
Yes, perhaps prices will rise until no more people can afford it than the supply will support. But perhaps that supply isn't enough to keep the industry from collapsing or to keep the population from collapsing, etc.
Regardless of whether the price rises to keep the resource out of the hands of everyone who needs it, the insufficient supply for effective function is still damaging - to a population, an industry, an economy. I would most definitely consider that a shortage.