What situation occurs when quantity supplied exceeds quantity demanded?

The correct answer, excess supply, refers to a situation where the quantity of a product that producers are willing to sell exceeds the quantity that consumers are willing to purchase at a given price. This typically occurs when the price of a good or service is set too high, leading to an imbalance in the market. As a result of this excess supply, producers may need to lower prices to encourage more consumers to buy their product, ultimately moving the market toward equilibrium.

Understanding the concepts of excess supply is fundamental in macroeconomics as it illustrates how market dynamics operate and how prices can influence buying and selling behaviors. This scenario highlights the critical interactions between supply and demand in determining optimal pricing and production levels.

While market surplus, supply glut, and demand shortage may relate to situations involving excess in different ways, the term excess supply specifically captures the scenario of surplus quantities supplied in relation to demand. Market surplus often refers to the broader implications of those excess supplies, while supply glut and demand shortage focus on slightly different aspects of economic activity and market function.