ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Disequilibrium refers to a situation in which demand does not equal supply. For example, the demand for a good might be 6, and the supply might be 10. The excess supply is 4. One possibility is that the excess supply causes the price of the good to fall, raising demand and reducing supply, and equilibrium results.

Detailed explanation-2: -in a market setting, disequilibrium occurs when quantity supplied is not equal to the quantity demanded; when a market is experiencing a disequilibrium, there will be either a shortage or a surplus.

Detailed explanation-3: -Economists call this an “excess demand” – the quantity demanded is greater than the quantity supplied at the given price. This is also called a shortage.

Detailed explanation-4: -Disequilibrium refers to an imbalance between the quantity demanded and the quantity supplied, at a particular price. If the product is underpriced, it will cause a shortage (excess demand) and this will push up price, encouraging further supply until equilibrium is reached).

Detailed explanation-5: -An equilibrium price is a balance of demand and supply factors. There is a tendency for prices to return to this equilibrium unless some characteristics of demand or supply change. Changes in the equilibrium price occur when either demand or supply, or both, shift or move.