Is there a surplus or a shortage of washing machines?
shortage surplus
A store has 20 washing machines for sale. The machines cost $600 each. At that price, 30 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 washing machines for sale. There are 20 machines for sale, but 30 people want to buy one.
So, there is a shortage of washing machines.