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Suppose you are a jeans producer who charges a price of $10 for a pair of jeans. But the equilibrium price is $15. At your price, you will have an _____ jeans.

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User Charise
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At your price, you will have an excess demand for jeans.
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User Itsbruce
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The correct answer is: "excess of demand for jeans".

The equilibrum price represents the point at which the desires of producers and consumer meet in a market. Therefore, the product is commercialized at the market price where the quantity supplied equals the quantity demanded.

The law of demand states that there is an inverse relationship between price and quantity demanded (ceteris paribus, hence given that the rest remains equal), while the law of supply states that there is a direct relationship between price and quantity supplied (ceteris paribus.

Therefore, if price is set under the equilibrium price, the price has experienced a decrease if compared to the equilibrum price. The amount demanded will rise, while the amount supplied will be decreased, generating an excess of demand.

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User ARTURIUS
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