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What are the two states of disequilibrium?

Updated: 4/28/2022
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TrogdortheBurninator

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12y ago

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The two states of disequilibrium are shortages and surpluses. A shortage is caused by excess demand that drives prices up; in other words there is not enough supply to meet demands until other suppliers see the high prices and try to get some of that money too, and then competition drives prices to a lower equilibrium price. A surplus is when an excess in supply leads to a decrease of price which leads to an increase of demand until an equilibrium is reached; there is more than enough supply to meet demand, in other words.

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Q: What are the two states of disequilibrium?
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