What situation occurs when quantity demanded is greater than quantity supplied?

When quantity demanded is greater than quantity supplied, a situation known as a shortage occurs. This imbalance indicates that consumers want to buy more of a good or service than what is available in the market. As a result, there are not enough goods to satisfy consumer demand, which can lead to upward pressure on prices. Sellers may realize that they can charge more due to the high demand and low supply, which often results in increased prices as they try to balance the market.

In contrast to this scenario, a surplus occurs when the quantity supplied exceeds the quantity demanded, leading to an excess of goods in the market. Equilibrium refers to the state where the quantity supplied equals the quantity demanded, resulting in stable prices. Inflation is a general increase in prices across a wide range of goods and services, not specifically related to the balance of supply and demand for a particular item.