Question

What happens in the situation of excess demand n excess suply?

Answer 1

Excess Supply. Excess supply is a market condition when the quantity supplied is greater than the demand for a commodity at the prevailing market price. It occurs at a price greater than the equilibrium price level. ... Consequently, to sell more supply, suppliers would start decreasing the prices to sell the excess stock.

Answer 2

Excess demand and excess supply.

• Demand and supply are the two most important aspects of the market. A market density in an equilibrium or balance condition when the demand and supply are met.
• Scarcity of any one of the two (either or demand or supply) can bring a big difference in the equilibrium and bring imbalance in the market similarly the abundance of any one of the two will also bring imbalance in the system.

If demand exceeds:

• The supply remains unchanged while the demand exceeds then the equilibrium will be disturbed and the price of the products will increase due to the limitation in supply.

If supply exceeds:

• The demand remains unchanged while the supply is exceeding then again the equilibrium will be disturbed and this imbalance will cause the prices of products to decrease drastically because of the surplus amount of products available for each demand.

To know more:

Difference between excess demand and excess supply?

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What happens in the situation of excess demand and excess supply?

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