When markets aren’t balanced, prices and the amount of products change because of supply and demand.
Surplus: This happens when there are too many goods and not enough buyers. When this occurs, prices usually drop. For example, if a store has too many winter coats, they might not sell well. To get people to buy them, the store would have to lower the prices.
Shortage: On the other hand, a shortage happens when more people want a product than what is available. This means prices go up. Think about when a brand-new video game console comes out but there aren’t many to sell. The price will go up because everyone wants to buy it.
These changes will keep happening until the market finds a new balance where the amount of products available matches what people want to buy.
When markets aren’t balanced, prices and the amount of products change because of supply and demand.
Surplus: This happens when there are too many goods and not enough buyers. When this occurs, prices usually drop. For example, if a store has too many winter coats, they might not sell well. To get people to buy them, the store would have to lower the prices.
Shortage: On the other hand, a shortage happens when more people want a product than what is available. This means prices go up. Think about when a brand-new video game console comes out but there aren’t many to sell. The price will go up because everyone wants to buy it.
These changes will keep happening until the market finds a new balance where the amount of products available matches what people want to buy.