Market Disequilibrium

Question 1

When does market disequilibrium occur?

Answer 1

Market disequilibrium occurs when the existing price level does not correspond with the equilibrium price level (where P1 is not equal to P2)

Question 2

What happens when P1 is not equal to P2

Answer 2

It results in the quantity demanded by consumers not being equal to the quantity supplied by producers. This can result in an excess in demand and a shortage in supply or an excess in supply and a shortage in demand