ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Excess Demand: the quantity demanded is greater than the quantity supplied at the given price. This is also called a shortage. Excess Supply: the quantity demanded is less than the quantity supplied at the given price. This is also called a surplus.

Detailed explanation-2: -A shortage is a situation in which demand for a product or service exceeds the available supply. When this occurs, the market is said to be in a state of disequilibrium.

Detailed explanation-3: -This excess supply is also known as a surplus. There are too many sellers who are enticed by the high price, and not enough buyers.

Detailed explanation-4: -A surplus exists when the price is above equilibrium, which encourages sellers to lower their prices to eliminate the surplus. A shortage will exist at any price below equilibrium, which leads to the price of the good increasing.

Detailed explanation-5: -In economics, all goods and services are scarce resources, meaning that there is not an unlimited number of goods or an unlimited amount of time. Free markets ration scarce goods through negotiation between supply and demand.