Question

What do economists mean by shortage? By surplus?

   What do economists mean by shortage? By surplus?

Macroeconomics

Glenn Hubbard, Tony… 6th Edition

Chapter 3, Problem 2

Instant Answer

Solved by Expert Daniel Cisneros

10/03/2019

Step 1

Equilibrium is a state where the quantity demanded is equal to the quantity supplied. This means that the amount of a product that consumers are willing and able to buy equals the amount that producers are willing and able to sell. Show more…

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What do economists mean by shortage? By surplus?

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Key Concepts

Shortage

A shortage in economics refers to a situation where the quantity demanded of a good or service exceeds the quantity supplied at the current price. This situation indicates market disequilibrium and typically prompts responses such as rising prices or increased production as market forces work towards restoring balance between demand and supply.

Surplus

A surplus in economics occurs when the quantity supplied of a good or service exceeds the quantity demanded at the prevailing price. It represents a condition of excess supply, which can lead to downward pressure on prices, prompting adjustments by producers and consumers to move the market back toward equilibrium.

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