Economics Supply And Demand Questions Medium
When there is a surplus in the market, it means that the quantity supplied exceeds the quantity demanded at the prevailing price. In this situation, suppliers are unable to sell all of their goods or services, leading to an excess supply. As a result, the price tends to decrease, and the quantity of the product or service available in the market increases.
The decrease in price occurs as suppliers try to attract buyers by lowering their prices in order to clear the surplus. This downward pressure on price helps to restore equilibrium in the market. Additionally, the increase in quantity available in the market is a direct consequence of the surplus, as suppliers are left with unsold inventory.
The adjustment process continues until the market reaches a new equilibrium, where the quantity supplied matches the quantity demanded. At this point, the surplus is eliminated, and the market is in balance once again.