excess demand

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Excess Demand

Demand for a good or service well over supply. Excess demand leads to high prices for the good or service.

excess demand

see EQUILIBRIUM MARKET PRICE.
Excess demandclick for a larger image
Fig. 64 Excess demand.

excess demand

or

shortages

a situation in which the quantity demanded (see DEMAND) of a product (OQ2 in Fig. 64) exceeds the quantity supplied (see SUPPLY) (OQ1) at the existing market price (OP). In competitive markets there will be an upward pressure on price, reflecting a shortage of the product, but where the price is controlled the excess could persist. See EQUILIBRIUM MARKET PRICE, Fig. 64 Excess demand. See entry.

EXCESS SUPPLY, PRICE CONTROLS.