Shortage, surplus and price mechanism, Macroeconomics

Shortage, Surplus and Price Mechanism:

A shortage is the situation in which the demand exceeds supply, which means producers are unable to meet the market demand for the product.

A surplus is the situation of excess supply in the market, and in which market demand falls short of the quantity supplied; which means the producers are unable to sell the entire produced goods in the market.

The price mechanism is the signalling and rationing device which prompts the consumers and producers to adjust with their demand and supply, correspondingly, in response to the shortage or surplus. Shortages make the price to raise prompting producers to produce more and consumers to demand for the fewer goods. Surpluses make prices to fall prompting the producers to supply the less and consumers to demand more goods. In either case, the price mechanism attempts to clear shortage or surplus in market.

 

Posted Date: 7/19/2012 3:26:42 AM | Location : United States







Related Discussions:- Shortage, surplus and price mechanism, Assignment Help, Ask Question on Shortage, surplus and price mechanism, Get Answer, Expert's Help, Shortage, surplus and price mechanism Discussions

Write discussion on Shortage, surplus and price mechanism
Your posts are moderated
Related Questions
Suppose the price level in year 2009 is 100 and $100 buys 100 notebooks that year. If the price level rises to 125 in year 2010, what is the new value or purchasing power of the do

how useful is national income statistics for indicating living standards


2012 Mangoes 91 boxes $7 a box Pinapples 56 boxes $12 a box 2013 Mangoes 108 boxes $14 a box Pinapples 70 boxes $8 a box Real GDP in 2013 using the chained-dol

Derive that the complex amplitude of the double convex lens shown in the image below with focal length 1/f = (n-1 ) (1/R 1 - 1/R 2 ). Hint: we derived an plano convex lens in cla

The demand curve for product X is given by QXd = 340 - 4PX.\ a) How much consumer surplus do consumers receive when Px = $45? b) How much consumer surplus do consumers receiv

What are the general principles about marginal and average total cost curves? General principles which are always true concerning a firm’s marginal and average total cost curve

Suppose that the demand curve for apples is given by Qd = 140 -  5P, where Qd is the number of pounds demanded per year and p is the price per pound. The supply of apples can be de

The Price ceiling is the law that sets a maximum price below the equilibrium market price, but a price floor is the law that sets a maximum price above the market equilibrium price

If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate? (b) How many years would it take for GDP (gross domestic product) to double (using your answer fr