Excess Supply and Demand

Equilibrium

• The point in which the supply curve intercept with the demand curve 

Excess Demand 

• Occurs when quantity demanded in greater then quantity supplied
• This will result in a shortage 
• Consumer cannot get quantity of the items they want 
• Price Ceiling 
• When government puts a legal limit on how high the price of a product can be 
• Creates a storage 

Excess Supply

• When quantity supplied is greater then quantity demanded
• Creates surplus 
• Producers have inventory that they cannot get ride of 
• Price Floor 
• The lowest legal price a commodity can be sold as
• The government use price floor to keep product prices from becoming too low