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Case Studies Index

What is Supply?... Continued

b) Forces of Supply and Demand (Surplus)

When the supply curve and demand curve are overlapped on each other, they reveal either a disequilibrium or equilibrium.  Fig. 7 on the left reveals a surplus disequilibrium. For example;

At P = 17,
Quantity demanded = 45 while
Quantity supplied = 57

A surplus of 12 results (or 45-57)

With a surplus, suppliers undercut each other pushing prices down towards equilibrium.

 

outcomes
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