Why do changes in demand or supply cause disequilibrium?

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2026-03-31 23:35

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Changes in demand or supply cause disequilibrium because they disrupt the balance between the quantity of goods consumers want to buy and the quantity producers are willing to sell at a given price. For example, an increase in demand can lead to a shortage if supply remains constant, resulting in upward pressure on prices. Conversely, a decrease in supply can create a surplus if demand stays the same, leading to downward pressure on prices. These imbalances prompt market adjustments until a new equilibrium is achieved.

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