Surplus (market)
A market surplus occurs when quantity supplied exceeds quantity demanded at a particular price and time. It can create unsold output and pressure to reduce price or production, depending on the market and constraints. It differs from an accounting surplus or the economic concepts of consumer and producer surplus, which measure different relationships.
Worked example
At $20 suppliers offer 600 units but buyers want 450. The model shows excess supply of 150 units at that price. A lower price may alter both quantities.
Common mistake
Do not confuse excess supply with profit or infer that every seller has the same unsold quantity. State the market-wide quantities and relevant price.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Supporting | September 2026–June 2027 |
| FIA | FBT | Supporting | September 2026–June 2027 |
