Excess demand: Difference between revisions
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==Definition== | ==Definition== | ||
'''Excess demand''' refers to a situation where the [[demand]] for a good exceeds the [[supply]] of that good. Excess demand typically occurs when the price of the good is below the [[market price]] for the given [[demand curve]] and [[supply curve]]. | '''Excess demand''' refers to a situation where the [[demand|quantity demanded]] for a good exceeds the [[supply|quantity supplied]] of that good. Excess demand typically occurs when the price of the good is below the [[market price]] for the given [[demand curve]] and [[supply curve]]. | ||
The market typically resolves excess demand | The market typically resolves excess demand by moving toward the [[market price]] on both curves. If this is not possible due to a [[price ceiling]], the market uses [[non-price competition]] and the [[black market]]. | ||
Latest revision as of 17:38, 18 February 2012
Definition
Excess demand refers to a situation where the quantity demanded for a good exceeds the quantity supplied of that good. Excess demand typically occurs when the price of the good is below the market price for the given demand curve and supply curve.
The market typically resolves excess demand by moving toward the market price on both curves. If this is not possible due to a price ceiling, the market uses non-price competition and the black market.