Because the quantity demanded and the quantity supplied are not equal.
How does the price system respond to surpluses and shortages? In: Economics [Edit categories]
Shortages always raise prices and surpluses always reduce prices until competition produces a price where there are no more surpluses or shortages.
efficiency
general equilibrium
over production can lead to a surplus of goods and/or services, and shortages can occur when demand for a product exceeds the productions of said product
How does the price system respond to surpluses and shortages? In: Economics [Edit categories]
Shortages always raise prices and surpluses always reduce prices until competition produces a price where there are no more surpluses or shortages.
b. Shortages always raise prices and surpluses always reduce prices until competition produces a price where there are no more surpluses or shortages. ;D
efficiency
It would be a Cash Budget. A Cash Budget is a detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.
general equilibrium
over production can lead to a surplus of goods and/or services, and shortages can occur when demand for a product exceeds the productions of said product
Competition eliminates shortages and surpluses by setting a market- clearing price.
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.
There are 3 types of disequilibrium's in balance of payments:- 1) cyclical disequilibrium 2) secular disequilibrium 3) structural disequilibrium structural disequilibrium at:-a) goods level b) at factors level
How do you correct disequilibrium?
Rent controls result in shortages and minimum wage laws result in surpluses