price mechanism and adjustment

Question 1

what is price mechanism?

Answer 1

the use of price signals to allocate scarce resources among competing uses

Question 2

what happens when quantity demanded > quantity supplied?

Answer 2

there is a shortage and this causes an upward pressure on price.
price increases, quantity rises as Qd falls and Qs rises until new equilibrium is reached

Question 3

what happens when quantity supplied > quantity demanded?

Answer 3

there is a surplus and a downward pressure on price.

price falls, quantity falls as Qd falls and Qs rises until a new equilibrium is reached.