A situation where demand and supply are not equal is called?

A situation where demand and supply are not equal is called?

• A. Equilibrium Price
• B. Disequilibrium
• C. Excess Supply
• D. Excess Demand

Answer: (B)

When demand and supply aren’t equal, the market isn’t in balance. That lack of balance is called disequilibrium. It means the price and quantity won’t settle where buyers and sellers agree. If buyers want more than sellers are willing to provide, there’s a shortage (excess demand) and prices tend to rise to restore balance. If sellers produce more than buyers want, there’s a surplus (excess supply) and prices tend to fall. The term that covers both situations of mismatch is disequilibrium, while the price that does restore balance—where quantity demanded equals quantity supplied—is the equilibrium price.

When demand and supply aren’t equal, the market isn’t in balance. That lack of balance is called disequilibrium. It means the price and quantity won’t settle where buyers and sellers agree. If buyers want more than sellers are willing to provide, there’s a shortage (excess demand) and prices tend to rise to restore balance. If sellers produce more than buyers want, there’s a surplus (excess supply) and prices tend to fall. The term that covers both situations of mismatch is disequilibrium, while the price that does restore balance—where quantity demanded equals quantity supplied—is the equilibrium price.