Market Surplus
Definition
Market surplus refers to a situation where the quantity supplied of a good or service exceeds the quantity demanded at a given price. It occurs when there is excess supply in the market, leading to downward pressure on prices.
Analogy
Imagine you're organizing a lemonade stand on a hot summer day. You prepare 100 cups of lemonade, but only 50 people show up to buy them. Now you have 50 cups left over, which represents the market surplus - more lemonade than what was actually needed.
Related terms
Equilibrium Quantity: The quantity of goods or services bought and sold in a market when demand equals supply.
Elasticity of Supply: A measure of how responsive the quantity supplied is to changes in price.
Price Elasticity of Demand: A measure of how responsive the quantity demanded is to changes in price.
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