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The following are some of the possibilities to tackle the situation of excess demand.

- queue system

In this case, first come first served principle holds good.

The customers will have to stand in line.

Early comers at the head of the line are served while customers at the end may get

nothing.

- seller's discretion

- rationing

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15y ago

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Can you provide an example of a situation where excess demand occurs?

An example of a situation where excess demand occurs is during the release of a highly anticipated product, such as a new iPhone model. The demand for the product exceeds the supply available, leading to shortages and long waiting times for customers.


Which situation best illustrate the concept excess demand?

Currently, due to rumors of gun control legislation, there is an excess demand for high capacity magazines. You can see the results of excess demand by searching for high capacity magazines for sale. Every venue that offers them for sale has nothing in stock. Places that do have them in stock are asking extraordinary prices for them. Therefore, the example of excess demand of high capacity magazines illustrates that excess demand causes scarcity of product and inflation of price. Conversely, excess supply will likely cause decreased prices.


When does excess demand occur in the equilibrium price?

Excess demand occurs when demand outweighs supply. This means there is a shortage of a good.


How Excess demand and excess supply eliminated by market forces?

Excess demand is easily eliminated by market forces. If either the price or the supply goes up, demand will decrease exponentially.


What situation can lead to excess demand?

Scarcity of the product, or if the price of the product has dropped. JohnnyChampagne's answer: When quantity demanded is more than quantity supplied. When the actual price in a market is below the equilibrium price, you have excess demand, because a low price encourages buyers and discourages sellers.


How do you response for excess demand and excess supply?

Increase the price


What is the difference between excess demand and excess supply?

Excess demand (a seller's market) means the product is in short supply and prices will rise. Excess supply (buyer's market) means too much product as compared to demand and therefore prices will fall.


What factors contribute to the presence of excess demand and excess supply in the market?

Excess demand occurs when the quantity demanded exceeds the quantity supplied at a given price, leading to shortages. Factors contributing to excess demand include high consumer demand, low prices, and limited supply. Excess supply, on the other hand, happens when the quantity supplied exceeds the quantity demanded, resulting in surpluses. Factors contributing to excess supply include low consumer demand, high prices, and oversupply.


What happens when excess demand occurs in an unregulated market?

Excess demand in an unregulated market will cause the price of a product to fall. True or False?


How do you eliminate excess demand and excess supply in equilibrium?

Price is one way to eliminate excess demand and excess supply. Once prices start to rise, the amount of people purchasing or needing certain products go down.


What is a sudden lack of availability?

Excess Demand.


What happens to the price of a good or service when there is excess demand?

When there is excess demand for a good or service, the price typically increases. This is because the high demand creates a scarcity of the product, leading sellers to raise prices to balance supply and demand.