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 surplus exists if the quantity of a good or service supplied exceeds the quantity demanded at the current price; it causes downward pressure on price.

Detailed explanation-3: -A Market Surplus occurs when there is excess supply-that is quantity supplied is greater than quantity demanded. In this situation, some producers won’t be able to sell all their goods. This will induce them to lower their price to make their product more appealing.

Detailed explanation-4: -In fact, at any above-equilibrium price, the quantity supplied exceeds the quantity demanded. We call this an excess supply or a surplus.