Is there a surplus or a shortage of hammers?
surplus shortage
Hammers cost $12 each. The hardware store has 30 hammers for sale. At that price, 35 people want to buy one.
There is a surplus if there is too much for sale at a given price.
There is a shortage if there is not enough for sale at a given price.
Surpluses and shortages usually happen when people who are selling goods or services charge too much or too little.
When the price is too high, consumers will not want to buy much of the good or service. The quantity demanded will be less than the quantity supplied. So, there will be a surplus.
When the price is too low, too many consumers will want to buy the good or service. The quantity demanded will be more than the quantity supplied. So, there will be a shortage.
At the current price, there are not enough hammers for sale. There are 30 hammers for sale, but 35 people want to buy one.
So, there is a shortage of hammers.