ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, an excess supply, economic surplus market surplus or briefly surply is a situation in which the quantity of a good or service supplied is more than the quantity demanded, and the price is above the equilibrium level determined by supply and demand.

Detailed explanation-2: -A surplus occurs when there is some sort of disconnect between supply and demand for a product, or when some people are willing to pay more for a product than others.

Detailed explanation-3: -If supply increases, producer surplus increases. If supply decreases, producer surplus decreases. Price elasticity of supply is inversely related to producer surplus.

Detailed explanation-4: -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-5: -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.