What is excess supply?
Excess supply is a form of allocative inefficiency where the supply of a good or service becomes greater than the demand for this good or service in the market. This often happens because the price for a good is set too high and thus the demand for the good falls down, as people may choose to buy alternative goods that are cheaper in price, or may forego buying the good altogether. This concept can be diagrammatically drawn on the excess supply curve.
CB
Related Economics GCSE answers
All answers ▸Explain one benefit of the UK developing free-trade agreements with non-EU countries
Explain why average costs of a business may fall as it experiences growth.
Give the definition of an externality and explain why it is a market failure?
Explain the difference between direct and indirect costs.