Disequilibrium occurs where demand and supply are not equal. This may
be either a surplus or a shortage. At this stage there will be a pressure
on price to change
In
the above diagram the equilibrium point C is where demand and supply interact.
At this point, price is Rf.20 the quantity demanded and supplied is 24 hundred
apples per week.
Any
price above equilibrium price (Rf. 20) would cause an excess supply OR Surplus
in the market, because more would be supplied at higher price than at lower
price by suppliers. [When at price Rf.30 the demand is only 12
whereas the supply is 36, so 24 hundreds of apples would be excess supplied or surplus in the
market]
A
t the same time, any price below equilibrium price (Rf.20) would cause an
excess demand OR shortage in the market, because more would be bought at lower
price than at higher price by consumers. [When at price Rf.10 the demand is 36
but the supply is only 12, so 24 hundreds of apples would be shortage or excess demanded in the
market].