Market Disequilibrium

Definition

Market disequilibrium refers to a situation where there is an imbalance between demand and supply in a market, leading to either excess demand (shortage) or excess supply (surplus). In other words, it occurs when the quantity demanded does not equal the quantity supplied.

Analogy

Imagine going to a popular concert where tickets are sold out quickly. However, due to some technical glitch, more tickets were printed than intended. This leads to chaos as there are too many tickets available compared to people who want them - creating market disequilibrium.

Related terms

Shortage: A situation where quantity demanded exceeds quantity supplied in a market.

Surplus: A situation where quantity supplied exceeds quantity demanded in a market.

Price Floor/Price Ceiling: Government-imposed minimum or maximum prices set above or below equilibrium respectively, causing market disequilibrium.