Economics: Shortage and Surplus
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The document discusses economic surpluses and shortages. A surplus occurs when the quantity supplied exceeds quantity demanded, resulting in excess supply. A shortage happens when quantity demanded is greater than quantity supplied, creating excess demand. It also outlines how changes in supply and demand impact equilibrium price and quantity, noting that an increase in demand or supply raises quantity but demand increases raise price while supply increases lower price.
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- 1. Presented By: Anand Singh Tomar DM17B04 PGDM - 2
- 2. A surplus exists at a market price when the quantity supplied exceeds the quantity demanded. (i.e., excess supply) A shortage exists at a market price when the quantity demanded exceeds the quantity supplied. (i.e., excess demand) SURPLUS SHORTAGE
- 3. When demand increases, equilibrium price and quantity both increase.
- 4. When demand decreases, equilibrium price and quantity both decrease.
- 5. When supply increases, equilibrium price decreases and quantity increases.
- 6. When supply decreases, equilibrium price increases and quantity decreases.