Commerce Exam > Commerce Videos > Economics Class 11 > What is Excess Supply and Excess Demand?: Introduction
What is Excess Supply and Excess Demand?: Introduction Video Lecture | Economics Class 11 - Commerce
FAQs on What is Excess Supply and Excess Demand?: Introduction Video Lecture - Economics Class 11 - Commerce
| 1. What is excess supply and excess demand? |  |
Ans. Excess supply refers to a situation in the market where the quantity of a good or service supplied by producers exceeds the quantity demanded by consumers at a given price level. On the other hand, excess demand occurs when the quantity demanded by consumers exceeds the quantity supplied by producers at a given price level.
| 2. What are the causes of excess supply and excess demand? | |
Ans. Excess supply can be caused by factors such as overproduction, decrease in consumer demand, or an increase in the price of the product. Excess demand, on the other hand, can be caused by factors such as increased consumer demand, shortage of supply, or a decrease in the price of the product.
| 3. How do excess supply and excess demand affect the market? | |
Ans. Excess supply leads to a surplus in the market, which puts downward pressure on prices. Producers may be forced to lower prices or reduce production to match the lower demand. In contrast, excess demand creates a shortage in the market, leading to higher prices. Producers may increase prices or increase production to meet the higher demand.
| 4. How does the government intervene in cases of excess supply and excess demand? | |
Ans. The government can intervene in cases of excess supply by implementing policies such as price controls, subsidies, or export promotion to increase demand or reduce supply. In the case of excess demand, the government can intervene by implementing policies such as price controls, import restrictions, or increasing supply through subsidies or production incentives.
| 5. What are the impacts of excess supply and excess demand on the economy? | |
Ans. Excess supply and excess demand can have significant impacts on the economy. Excess supply can lead to decreased profits for producers, layoffs, and reduced economic growth. Excess demand can lead to inflation, higher prices, and income inequality. Both situations can disrupt market equilibrium and result in economic inefficiencies.
Text Transcript from Video
this diagram is going to look at excess
supply and access demand and how
understanding these concepts help us to
understand how we arrived at the
equilibrium price if you're not sure
about supply demand or equilibrium you
should watch the videos on those topics
the interaction of supply and demand
gives us any equilibrium price of p1 and
the equilibrium quantity of q1 we can
see how we can arrive that if the price
was not equal to p1 for example if it
was p2 because the price is so high
businesses would want to supply more of
this product in this case they would be
willing to supply q2 because the prices
is high consumers won't want to buy that
many they would only want to spot - but
our demand q3 we end up with what we
call an excess of supply this is how
much the supply is greater than the
demand for the product in real life for
a business this looks like too much
stuff on their floor they have q3 q2
products are on on for sale but only Q 3
of them are being sold because
businesses need to sell their product
that will decrease the price if they
decrease their price down to p3
they will still have an excess supply
they'll still have too much stock on the
stock floor and I'll keep on reducing
the price this will continue until they
reach equilibrium at p1
if the price was lower than p1 so now
we're going to make our equal our price
p2 lower than p1 because the price is so
low consumers want to buy more of it the
demand for this product will be at q2
because there isn't much money to be
made out of selling this product
businesses won't want to supply that
many in this case they supply q3 this
now gives us an excess of demand there
is too much demand for this product
consumers are demanding q2 the
businesses are only selling q3 in real
life this looks like a business setup
making q3 products and then selling them
all out they'll see that this pocket
this price of this product is popular
and as a result but will increase the
price this is because the motive of a
business is always to maximise their
profits if they were to increase their
price to p3 there would still be an
excess demand this was still men that
have to met their products being sold
out too quickly and seeing that
opportunity for more profit the business
will increase their price again and this
will continue until they arrive at p1 so
whether the business sets their price
above the equilibrium or below the
equilibrium we can see that the forces
of excess supply and excess demand will
drive the price until it reaches its
equilibrium point
supply and access demand and how
understanding these concepts help us to
understand how we arrived at the
equilibrium price if you're not sure
about supply demand or equilibrium you
should watch the videos on those topics
the interaction of supply and demand
gives us any equilibrium price of p1 and
the equilibrium quantity of q1 we can
see how we can arrive that if the price
was not equal to p1 for example if it
was p2 because the price is so high
businesses would want to supply more of
this product in this case they would be
willing to supply q2 because the prices
is high consumers won't want to buy that
many they would only want to spot - but
our demand q3 we end up with what we
call an excess of supply this is how
much the supply is greater than the
demand for the product in real life for
a business this looks like too much
stuff on their floor they have q3 q2
products are on on for sale but only Q 3
of them are being sold because
businesses need to sell their product
that will decrease the price if they
decrease their price down to p3
they will still have an excess supply
they'll still have too much stock on the
stock floor and I'll keep on reducing
the price this will continue until they
reach equilibrium at p1
if the price was lower than p1 so now
we're going to make our equal our price
p2 lower than p1 because the price is so
low consumers want to buy more of it the
demand for this product will be at q2
because there isn't much money to be
made out of selling this product
businesses won't want to supply that
many in this case they supply q3 this
now gives us an excess of demand there
is too much demand for this product
consumers are demanding q2 the
businesses are only selling q3 in real
life this looks like a business setup
making q3 products and then selling them
all out they'll see that this pocket
this price of this product is popular
and as a result but will increase the
price this is because the motive of a
business is always to maximise their
profits if they were to increase their
price to p3 there would still be an
excess demand this was still men that
have to met their products being sold
out too quickly and seeing that
opportunity for more profit the business
will increase their price again and this
will continue until they arrive at p1 so
whether the business sets their price
above the equilibrium or below the
equilibrium we can see that the forces
of excess supply and excess demand will
drive the price until it reaches its
equilibrium point
About this Video
4.76/5
Rating
Sep 21, 2025
Last updated
Related Exams
Video Description: What is Excess Supply and Excess Demand?: Introduction for Commerce 2025 is part of Economics Class 11 preparation.
The notes and questions for What is Excess Supply and Excess Demand?: Introduction have been prepared according to the Commerce exam syllabus.
Information about What is Excess Supply and Excess Demand?: Introduction covers all important topics for Commerce 2025 Exam.
Find important definitions, questions, notes, meanings, examples, exercises and tests below for What is Excess Supply and Excess Demand?: Introduction.
Introduction of What is Excess Supply and Excess Demand?: Introduction in English is available as part of our Economics Class 11 for Commerce & What is Excess Supply and Excess Demand?: Introduction in
Hindi for Economics Class 11 course. Download more important topics related with notes, lectures and mock test series for
Commerce Exam by signing up for free.
Description
Video Lecture & Questions for What is Excess Supply and Excess Demand?: Introduction Video Lecture | Economics Class 11 - Commerce - Commerce full syllabus preparation | Free video for Commerce exam to prepare for Economics Class 11.
Information about What is Excess Supply and Excess Demand?: Introduction
Here you can find the meaning of What is Excess Supply and Excess Demand?: Introduction defined & explained in the simplest way possible.
Besides explaining types of What is Excess Supply and Excess Demand?: Introduction theory, EduRev gives you an ample number of questions to practice What is Excess Supply and Excess Demand?: Introduction tests,
examples and also practice Commerce tests.
Related Searches
What is Excess Supply and Excess Demand?: Introduction Video Lecture | Economics Class 11 - Commerce
,past year papers
,Exam
,Extra Questions
,What is Excess Supply and Excess Demand?: Introduction Video Lecture | Economics Class 11 - Commerce
,Previous Year Questions with Solutions
,Semester Notes
,video lectures
,Sample Paper
,What is Excess Supply and Excess Demand?: Introduction Video Lecture | Economics Class 11 - Commerce
,practice quizzes
,Free
,Summary
,mock tests for examination
,Viva Questions
,Important questions
,ppt
,Objective type Questions
,MCQs
,study material
,shortcuts and tricks
;
Study What is Excess Supply and Excess Demand?: Introduction on the App
Students of Commerce can study What is Excess Supply and Excess Demand?: Introduction alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the What is Excess Supply and Excess Demand?: Introduction,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of What is Excess Supply and Excess Demand?: Introduction is prepared as per the latest Commerce syllabus.
|
© EduRev
|
Education Revolution
|
|
Signup on EduRev and stay on top of your study goals
10M+ students crushing their study goals daily