Is there a surplus or a shortage of tennis rackets?
shortage surplus
Tennis rackets are on sale for $40. The sporting goods store has 50 rackets available for sale. At that price, 65 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 tennis rackets for sale. There are 50 rackets for sale, but 65 people want to buy one.
So, there is a shortage of tennis rackets.