excess demand and excess supply

Question 1

excess demand

Answer 1

the price of coal falling betwlow the equilibrium price p1 causes the market to move to disequilibrium where q2 coal is demanded and q1 is suppled

resulting in Q2-Q1 excess demand of coal at price p. In a free market there will be upward pressure on the price resulting in a contraction along the demand curve and an extension along supply curve

the increase in price incentives firms tp increase supply from Q1 to Q3 and rations consumers forcing them to reduce demand from Q2 to Q3. The market returns to equilibrium where lower quantity q1 of coal is bought and sold at higher price p1

Question 2

excess supply

Answer 2

the price of steel rising above the equilibrium price p1 causes the market to move to disequilibrium where q2 steel is supplied and q1 is demanded resulting in q2 to q1 excess supply of steel at price P. In a free market there will be downward pressure on the price

resulting in an extension along the demand curve and a contraction along the supply curve

the decrease in price incent5ivies consumers to increase dnenad to Q3 and rations firms forcing them to reduce supply from Q2 to Q3. The market returns to in equilbrum where lower quantity q3 of steel is bought and sold at lower price p1