When quantity demanded is greater than quantity supplied,

Question

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When quantity demanded exceeds quantity supplied, it creates a shortage. This shortage puts upward pressure on prices, leading them to rise. As prices increase, the quantity demanded typically decreases (since the higher price discourages buyers), and the quantity supplied increases (as suppliers are motivated by the higher price to produce and sell more). This process continues until the market reaches a new equilibrium where quantity demanded equals quantity supplied.

When Quantity Demanded Is Greater Than Quantity Supplied