How is surplus in a market defined?

A surplus in a market occurs when the quantity supplied exceeds the quantity demanded. This situation reflects an imbalance where producers have produced more goods than consumers are willing or able to purchase at a given price. When there is a surplus, it can lead to downward pressure on prices, as sellers may lower prices to stimulate demand and eliminate the excess supply.

In contrast, the other scenarios represent different market conditions. When the quantity demanded equals the quantity supplied, the market is in equilibrium, maintaining a stable price. If the quantity demanded exceeds the quantity supplied, it creates a shortage, often driving prices up as consumers compete for the limited goods available. Perfectly elastic demand indicates that consumers will buy any quantity of a good at a specific price, but it doesn't directly relate to the concepts of surplus, supply, or demand balance. Understanding the dynamics of surplus helps illustrate fundamental market principles and the effects of price adjustments.