ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Whenever there is a surplus, the price will drop until the surplus goes away. When the surplus is eliminated, the quantity supplied just equals the quantity demanded-that is, the amount that producers want to sell exactly equals the amount that consumers want to buy.

Detailed explanation-2: -When there is a surplus, the price falls. Surplus or Excess Supply The quantity supplied exceeds the quantity demanded. Shortage or Excess Demand The quantity demanded exceeds the quantity supplied.

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: -As the equilibrium price decreases, producer surplus decreases. Shifts in the demand curve are directly related to producer surplus. If demand increases, producer surplus increases. If demand decreases, producer surplus decreases.

Detailed explanation-5: -If demand decreases, producer surplus decreases. Shifts in the supply curve are directly related to producer surplus. If supply increases, producer surplus increases.