Excess Supply
The market price is below the equilibrium price.
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
below equilibrium price and causes a shortage
When the market price is below its equilibrium value, with all else remaining equal, the demand for the good will rise, shifting the demand curve. The system will then move back into equilibrium with the new price and demand.
Quantity of demand increases and supplies decreases.
The market price is below the equilibrium price.
The equilibrium quantity supplied is lower than the actual quantity supplied. The market price is below the equilibrium price.
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
below equilibrium price and causes a shortage
When the market price is below its equilibrium value, with all else remaining equal, the demand for the good will rise, shifting the demand curve. The system will then move back into equilibrium with the new price and demand.
Quantity of demand increases and supplies decreases.
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
A
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.
equilibrium price
equilibrium price