Both excess supply and excess demand are a result of equilibrium. disequilibrium. overproduction. elasticity.

Both excess supply and excess demand are a result of disequilibrium. It is a condition where supply and demand don’t meet at the same rate or level which is called equilibrium.  

EXPLANATION:  

Disequilibrium is a condition where the variables of price and quantity don’t meet the buyers’ and sellers’ expectations. It also can be said that equilibrium is a condition where price and production are naturally brought to the middle ground. On the contrary, when the variables of price and quantity are in agreement with the buyers’ and sellers’ expectations, the condition is called equilibrium.  

•Effects of excess demand

1.A change in demand affects the equilibrium price and outcome to change in the same direction.  

2.Excess demand will cause an increase in the equilibrium price and the number of goods.

3.Excess demand also develops the initial price in the market.  

4.Excess demand causes the price to rise, triggers the sellers to sell more, and create an increasing output.  

•Effects of excess supply

1.Excess supply causes a reduction in the equilibrium price and an increasing number of goods quantity

2.Excess supply will cause the price to fall and the quantity of demand increase

LEARN MORE:  

If you’re interested in learning more about this topic, we recommend you to also take a look at the following questions:

1.The main mechanism that regulates the market system is  

2.Excess demand and excess supply  

KEYWORDS: Both excess supply and excess demand are a result of, disequilibrium, excess demand, excess supply

Subject: Social Studies

Class: College

Sub-chapter: Economic  

Disequilibrium

Further Explanation:  

Disequilibrium is a condition when supply and demand don’t meet at the same rate. In disequilibrium, the price of variables doesn't meet the buyer’s and sellers expectations. The variable of quantity also do not match the expectation of buyers and sellers. Disequilibrium is the situation where the external and internal forces prevent the market equilibrium. It is described as a deficit or surplus in the country’s balance of payments. The Demand and Supply are mismatched.  The reason for the disequilibrium is government intervention, inefficiencies by the supplier. This theory was propounded by John Maynard Keynes. Market equilibrium is a condition where a market price is established through the competition so that the number of goods and services bought by buyers is equal to the number of goods and services produced by sellers. This is called a competitive price and the quantity is called competitive quantity. There are three properties of Equilibrium: the behavior of the agent is consistent, no agent has the incentive to change the behavior. Equilibrium is the outcome of the dynamic process. The equilibrium price is the amount supplied to the equal amount demanded. The firms maximize profit at the market price.  Nash equilibrium is used in economics and is the main alternative to the competitive equilibrium. To find the price of equilibrium one must need to plot the supply and demand. In dynamic equilibrium, various quantities grow at the same rate.  In Dynamic Equilibrium physical capital stock grows at the same rate. The procedures of comparing two dynamic Equilibrium are known as comparative dynamics.

Learn More:

1.What did China agree to do once the treaty of Nanjing was signed? Check all that apply.

2.Which of the following was a religious movement at the turn of the twentieth century that sought justice for the less fortunate?

Answer Details:

Grade: High School

Subject: Social Science

Topic: Disequilibrium

Keywords:

Competitive price, maximize, profit, market price, competitive equilibrium, comparative dynamics.

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answer; participant observation method;