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.

References in periodicals archive ?
A surfeit of money would create excess demand for imports.
There needs to be an orderly adjustment to the current situation and an orderly adjustment means finding a way to smooth out the excess demand and the pressures on currencies and reserves so that the countries can then adjust properly.
In the money market, the adjustment variable is the interest rate, which rises (i > 0) when there is excess demand (EDM).
This is simply caused by excess demand that is not catered to due to the lack of supply.
According to senior officials, the aggressive bidding created an excess demand for 1,800 MHz in a few circles at the end of the 28th round of the auction.
Price rigidity and soft budget constraint do not fit with an equilibrium model and pave the way for either excess demand or excess supply in the markets for teams' inputs (labor, talents) and outputs (gate receipts, TV rights revenues).
REstore's Demand Response allows energy suppliers and transmission grid operators to look to energy users, such as ACS&T, to relieve the energy market and the grid of excess demand at critical times.
According to an EU study, the labour market could face an excess demand of 384,000 IT practitioners by 2015.
This line of reasoning argues that the failure of the Fed to satisfy the excess demand for money, i.e., the Fed not increasing the stock of money, induces a costly and possibly self-reinforcing deflationary process as individuals attempt to restore their cash balances to desired levels.
The company has granted the underwriters a 30-day option to buy 3.6m additional shares to meet excess demand.
"Domestic consumption has been growing very fast as a result of rapid demographics, steady economic growth and heavy subsidies, with the latter leading to excess demand," said Ali Aissaooui, head of economic research at Arab Petroleum Investments Corporation in Saudi Arabia.