Shortages, Surpluses, and Disequilibrium

Every price tells buyers and sellers how much to want and how much to offer. At equilibrium those two amounts match. Push price below equilibrium and buyers want more than sellers will provide: a shortage, quantity demanded greater than quantity supplied. Push price above equilibrium and sellers offer more than buyers want: a surplus, quantity supplied greater than quantity demanded. Both are the same disease, a wrong price, just on opposite sides.

Left alone, the market fixes itself. In a shortage, disappointed buyers bid price up; as price rises, quantity demanded falls and quantity supplied rises, closing the gap until they meet at equilibrium. In a surplus, sellers stuck with unsold goods cut price; quantity supplied falls and quantity demanded rises until the gap closes. This adjustment is why equilibrium is called stable: any shock away from it sets up forces pulling it back.

This matters because real markets often cannot adjust freely. A price ceiling set below equilibrium, like rent control, locks in a shortage on purpose: price cannot rise to clear it, so the gap persists as long queues, waitlists, or black markets instead. A price floor set above equilibrium does the same for surpluses, think of agricultural price supports. Unit 1 builds toward this: the curves give you equilibrium, and shortages and surpluses are what happens when something, government or sellers themselves, keeps price from getting there.