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: -When quantity demanded is equal to the quantity supplied, there will be no need to correct the market since neither surplus nor shortage exists. At this point, the market is said to be cleared precisely because it is in equilibrium.

Detailed explanation-3: -A surplus is a situation in which quantity supplied is greater than quantity demanded. If a surplus occurs, producers reduce prices to sell their products.

Detailed explanation-4: -When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.