In competitive markets, a surplus or shortage will

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In competitive markets, a surplus or shortage will cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. As the market is not in equilibrium, either too much or too little of a given product is being produced or demanded, and this in turn will cause producers and consumers to adjust their behavior until equilibrium is reached again, correcting the surplus or shortage. For example, if there is a surplus of a product, prices may decrease, which would incentivize consumers to buy more, and producers to reduce production, both activities moving toward equilibrium. Similarly, in the case of a shortage, prices may increase, incentivizing producers to produce more and consumers to reduce their demand, again moving towards equilibrium.

In Competitive Markets, a Surplus or Shortage Will