2.4 Market equilibrium: demand and supply

excess supply

In the context of demand and supply, occurs when the quantity of a good demanded is smaller than the quantity supplied, leading to a surplus; see surplus.

equilibrium

A state of balance such that there is no tendency to change.

surplus (markets)

In general, this is the excess of something over something else to which it is being compared. In the context of demand and supply, it is the extra supply that results when quantity supplied is greater than quantity demanded.

shortage

In the context of demand and supply, is the amount by which quantity demanded is greater than quantity supplied.

excess demand

In the context of demand and supply, occurs when the quantity of a good demanded is greater than the quantity supplied, leading to a shortage of the good; see shortage.

market equilibrium

Occurs where quantity demanded is equal to quantity supplied, and there is no tendency for the price or quantity to change.

equilibrium price

The price determined in a market when quantity demanded is equal to quantity supplied, and there is no tendency for the price to change.

equilibrium quantity

The quantity that is bought and sold when a market is in equilibrium.