State two ways through which excess supply condition is created in the market.

Dear Student

Excess supply condition is a disequilibrium condition of the market when the quantity supplied is more than quantity demanded . This can arise in two situation :

a) When the price is set too high . When the price of a commodity is exorbitantly high then the suppliers would have an incentive to supply but the buyers won't be attracted to buy because of the price .

b) When due to some other factor the demand of a good suddenly falls . As for example , suppose too many people suddenly became health conscious and stopped consuming alcohol . Then this suddenly fall in demand will lead to a excess supply in the market .

Regards .

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1. When there is a fall in demand due to various reasons.
2. When there is a rise in supply for to various reasons.
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