Shortage and surplus in a competitive market. Surplus goods. Ways to sell surplus. Promising solutions in company inventory management

According to statistics, the shortage of goods is one of the most acute problems for both the seller and the buyer and is often estimated at about 8% of the total turnover. According to another, no less sad statistics, in big stores surplus goods (often called "non-liquid") is up to 20% of the entire range!

In other words, getting rid of these two misfortunes is extremely difficult. Both are often the result of poor planning and insufficient control over consumer demands. The healing process can drag on for months, and as a result, getting rid of the global shortage syndrome, the store often ends up with excess inventory.

What is more dangerous for the company? Deficiency or surplus? By far the most dangerous situation is to have a deficit in one good and a surplus in another. Conversely, it is best to have neither. However, let's not close our eyes to the obvious - there were, are, and may still be deficits and surpluses. It is necessary to know the enemy by sight, so let's take a closer look at these two common phenomena.

Deficit. Its causes and consequences

deficit- excess of demand over supply. A shortage indicates a mismatch between supply and demand and the absence of a balancing price.

Deficiency can be temporary or permanent. But in any case, its consequences are quite obvious - the company receives less profit. However, not all so simple. If the deficit is of a permanent protracted nature, then the consequences can be sadder than it seems at first glance:

  • Loss of profit due to too low a price;
  • Direct losses due to lack of sales;
  • Deterioration of the store's image in the eyes of customers: "There are never the right products here";
  • Loss of potential and real customers;
  • Emptiness on the shelves of stores, empty counters;
  • Growth in sales from competitors who have such a product;
  • Costs due to actions aimed at eliminating the shortage - moving goods on the shelves, urgent search for a substitute product;
  • Wasted money on advertising campaign or tasting;
  • Stress among employees and, as a result, their demotivation.

The consequences of deficiency are more concerned external environment store and are especially dangerous for a company that is in the stage of growth and development, when winning customers and their loyalty is a strategic goal.

Let's consider the possible factors why we have dissatisfied buyers, nervous sellers and the lack of goods in stock:

1. Unbalanced price (demand outstrips supply). A shortage usually indicates low supply caused by a low price. “They are snapping up like hot cakes,” we say, implying that the goods are leaving quickly. Too fast. So fast that we can't keep up with the increased demand. A striking example is a product during sales. A discount of up to 50% has been announced, and as a result, people are pouring into the store, buying up everything that has yellow price tags. Who doesn't want to buy candy for half the price? However, not always only the price is the cause of the shortage.

What to do? Raise the price.

2. Errors in procurement planning and sales analysis. As a rule, this reason lies in people who, for some reason, do their job poorly. Perhaps they are not trained, perhaps they do not see the connection between the purchased and sold goods. Either way, without serious sales analysis and precise planning, a company quickly ends up with an unbalanced inventory. The manager of the production company says: “When we first started producing these dumplings, no one knew how they would be sold. We made a batch for testing and, surprisingly, it went very well. Then we launched another batch into production. Our sales department was enthusiastic set about "promoting" the goods. A week later, the wholesalers almost smashed the plant - so great was the demand for this product. And everyone wanted it immediately, but our production could only satisfy half of the total demand ... And a month later, customers began to refuse purchases, explaining this by a too long waiting period ... People in the stores tasted dumplings, but the lack of goods on the shelf led to the fact that all promotional efforts were in vain. The lack of accurate forecasts and planned purchases leads to a direct loss of customers. They tend to forget about a new product if they don't see it on sale for a long time.

What to do? Teach buyers how to plan, understand why the analysis does not show the whole picture. Maybe the point is in the incorrect accounting of positions - when "there is in the computer", but not in the warehouse?

3. Change in the current situation on the market (appearance of new fashion, trends, law). A familiar picture, isn't it? Just yesterday, a hole in jeans seemed like a disaster. And today, young shoppers roam stores looking for the most tattered and frayed items. The new healthy lifestyle trend has shoppers asking and sellers rushing to fill warehouses with products labeled "0 calories" or "low fat" or "no soy." If yesterday was accepted new law that all children under 12 years of age must be transported only in a child car seat, it is possible that such car seats will suddenly become in increased demand.

What to do? Respond to customer requests and new laws in a timely manner, keep abreast, make market research your direct responsibility. Or wait until the end of the law ...

4. Active advertising or PR campaign. A case from life: "We have an ordinary store that sells many products from different manufacturers. Suddenly, buyers begin to actively ask "that yogurt that is in the advertisement." We have never sold it so actively! We start to figure it out, and we see that the manufacturer has launched an active advertising on television and in family magazines. He wanted to make a surprise for us. If we had known about this action in advance, of course, we would have prepared and increased the inventory of this yogurt ... ". In our country, people trust advertising and actively buy the advertised product. Therefore, such a "sudden" attack on the consumer does not lead to anything but problems and shortages.

What to do? Educate suppliers by explaining to them what the consequences of such activities are. Before any promotion, increase orders according to the planned increase in demand.

5. Logistic problems. The item may be correctly ordered. It can be priced right. It is properly advertised. But if for some reason it is not delivered to the warehouse or is late for the store, there is a high probability of being in a state of shortage. This is especially true for perishable goods (meat, fish, dairy products, bread), where one day of delay can reject the entire batch. If the cargo moves to the store for four days instead of the planned two days, then all ideal planning comes to naught - the store gets two days of work with empty shelves. Sometimes this is enough to lose many regular customers and earn the image of the store "where there is never anything."

What to do? Work with those suppliers and transport companies who take responsibility for the delay of the shipment. Or not work with those who constantly let you down. After all, it's your money.

6. The goods are ordered without taking into account the complexity. There is a product whose sales affect the sales of another - for example, champagne and sweets, flour and yeast, green peas and mayonnaise. In such a case, the qualifications of the manager who draws up the purchase order may be crucial. "In our company, orders for beer are taken by one manager, and another manager is responsible for snacks, chips, crackers and nuts. The trouble is that they operate separately from each other. As a result, we get chips, but the beer has not yet arrived ... ". The shortage of one product leads to the difficulty of selling another.

What to do? Understand the qualifications and motivation of your staff. Or deal with the categories of goods - who is responsible for what. Are buyers motivated enough for such a result as the sale of goods?

7. Social and environmental factors. Weather, ecology, epidemics can provoke an unexpected high demand for a product. If the summer turned out to be very hot, then the demand for ice cream and soft drinks may exceed the supply by several times. An unexpected shutdown of water in the area provokes a demand for bottled water. During the SARS epidemic, the demand for respirators in China jumped tenfold! Such a shortage is in the nature of an outbreak and ends as abruptly as it begins.

What to do? You can wait - such phenomena pass quickly. You can have time to respond to demand, quickly purchase the required product and earn decently on the increased demand.

Surplus goods. Ways to sell surplus

Surplus stock can be:

  • reversible, but too big. Then it makes sense in the first place to reduce the volume of purchases of this product.
  • have a slow turnover. In this case, it is more correct to first reduce the price and stimulate sales.
  • "dead", that is, not for sale at all. If the consumption of the goods for three months 1 was not made, then it falls into the category of "dead". In this case, you can try to perform other actions.

But before the necessary steps are taken, it is necessary to understand the causes of the surplus:

1. Unbalanced price(the price is too high for this market or for this type of product). No one will overpay for a product or service if the price on the market is already set or exceeds reasonable limits.

2. The expiration date or sale has expired. The store sells food products, including perishable goods (for example, fish), or has in its assortment products with a limited shelf life (household chemicals, cosmetics). Failure to sell it within the required period leads to the formation of substandard goods. It is practically not subject to further processing and sale.

3. Mistakes in sales forecasts. Says the buyer of one of the major trading companies: "When we first started buying this vegetable juice, no one knew how it would be sold. We brought a batch for testing and, surprisingly, it went very well. Then we ordered three more containers of this juice ... And sat down with a six-month supply - all of a sudden customers who at first actively bought juice stopped taking it at all, they tried it and didn’t like it ... ". Purchase of goods "maybe" and leads to such sad results.

4. Overbuying. For example, we sell 30-32 bottles of wine per month. But the purchased batch is 24 bottles - this is the minimum packaging from the supplier's warehouse. We cannot buy less and have to buy more - 2 batches of 24 bottles - to meet the demand. If we do not stimulate demand for this wine, we will soon find ourselves in a situation of overstocking.

5. Commodity cannibalism(the appearance of one product crowds out the sale of another). In order to expand the assortment, the company introduced cheaper milk into the assortment good quality. As a result, the demand for milk has fallen trademark, and after a short time there was an excess of this product in the warehouse.

6. Changing the fashion or taste of consumers. The emergence of DVD technology on the market has pronounced its verdict on video cassette recorders. Fashion doesn't change as fast in food as it does in manufactured goods markets, but the classic example is the bouillon cube fashion that came and went quickly. At first they were in great demand, then the consumer "ate" prepared food and turned his gaze to the side healthy lifestyle life. At one time, soy products were very popular, but now there is a lot of information that genetically modified components are often found in soy. As a result, the demand for soy and products containing it has fallen sharply.

7. Legislative acts(prohibition on the sale of products). The ban on the sale of poultry meat in some countries due to the threat of an epidemic of bird flu has led to the fact that millions of tons of chicken meat have been transferred to surplus, and then to substandard goods. The introduction of censorship on advertising beer led to a decline in sales

8. Insufficiency of goods, erroneous proportions when ordering complete goods. As a result, there is a deficit for some goods, and a surplus for others. The director of one vegetable pavilion says: “We sell vegetables. If we make a mistake with the order of potatoes and bring less, then there will certainly be a surplus of beets in the warehouse - this product is usually bought together. Beets are sold less often, but potatoes can be sold and without beets.

9. Reserve in anticipation of an increase in demand or prices(in wholesale companies). Managers can issue additional invoices to protect themselves in the event of a shortage. If the purchasing department is not aware of such "reservation" facts, then the delivery of goods to the warehouse continues. After a short time, it turns out that the goods were in reserve not at the request of customers, but at the will of sellers and real demand goods are not provided.

Of course, there are a thousand reasons to keep inventory in stock. But it must be understood that if the product is not for sale, then it does not contribute to the generation of profit for which the business exists. Purchased goods are related funds. You have invested them. And it doesn't matter how much these reserves cost now - there is no money left.

And although it's not the best the best way- to sell goods for a penny, but perhaps this is better than believing that one day the client will come to his senses and buy all the dusty piles of cans in the warehouse. Don't get used to your reserves! The purpose of inventory reduction is to get rid of unnecessary items at the most favorable price or at minimal cost.

This can be done in different ways:

1. Sale with a discount or a global price reduction.

2. Stimulation of the selling personnel. You can assign monetary or in-kind remuneration to sellers for the sale of "illiquid assets". This works especially well if the customer can choose between several types of goods.

3. Selling to competitors at preferential prices. Perhaps you just have an excess of a well-selling product, and your competitor around the corner is in dire need of it. Why not try?

4. Actions to stimulate demand for this product(artificial creation of demand). Requires additional investment in advertising, but often brings good results (for example, hold a wine tasting or arrange a gourmet corner, where cheese and grapes will be laid out along with wine)

5. Creation of artificial scarcity. Sometimes it is enough just to announce that there will be no deliveries of goods for the next two weeks (for example, due to holidays or holidays). This helps to optimize stock if the item has good turnover but is overstocked.

6. Return to supplier or manufacturer. The best time for this type of negotiation is in the lead-up to an agreement to purchase a new product line or a large purchase order. Case study: “We just opened a store and took the advice of a supplier to buy a batch of expensive wines. It didn’t work, and for three months we kept a stock of these wines worth almost $ 4,000 in our warehouses. During this time, our relationship with the supplier developed and We switched to a credit basis. One fine day, we turned to him with a request to take back this product, which was so incorrectly imposed on us. The supplier refused. Then we negotiated that we would be able to repay our loans only when we restructure the debt due to this wine As a result, the supplier bought this batch from us in parts on account of our debt." Naturally, this method is only good for those products that can be stored for a sufficient time under suitable conditions.

7. Creation of "kits"(in socialist times, this was called "loaded"). Stale goods are given as a bonus or as a gift. It is also possible to sell the excess on the principle of "two in one" ("when you buy two cans of peas, you get a third can (or a can of corn) for free!").

8. Sale of goods to own personnel or use for the needs of the company. In some stores, there is a culinary department, where goods are transferred with an approaching expiration date. The main thing here is the strictest quality control of such products, so as not to violate the real terms of implementation in any case - the consequences can be the most sad. One of the most famous Western companies practiced a method of selling to employees goods with an expiring (by no means expired!) Expiration date at symbolic prices. However, soon the abuses (resale in the markets) on this basis became so obvious and large that this practice was discontinued. This way of getting rid of excesses is as effective as it is dangerous. Before you resort to it, make sure that you are able to control the entire chain of movement of goods.

9. Implementation charity events or donations. Give the product to those who may need it. You will not only get rid of excesses, but also do a good deed. The main thing is to inform as many people as possible about this good deed ...

When the total quantity of a product offered by producers exactly matches the quantity of a product that consumers plan to buy, i.e. and the plans of sellers and buyers coincide, then no one has to change these plans - the market is in a state of equilibrium.

The meaning of balance: at the intersection point (at the equilibrium point) the quantity that the consumer wants to buy and the producer to sell coincides. And only at such a price, when these plans for selling and buying coincide, the price does not tend to change.

Law of Market Equilibrium states that the price of any good changes to bring the demand and supply of the good into equilibrium. Stable balance- a state, deviation from which leads to a return to the same state. Competitive price is the equilibrium price formed on competitive market. Thus, in a competitive market, provided that the demand for a product depends on its price, an equilibrium market price is established, corresponding to the equalization of supply and demand. The market price is called free, that is, it is free from external dictates, but not free from the laws of the market. Equilibrium volume- the volume of supply and the volume of demand in conditions when the price balances supply and demand.

Demand and supply curves, reflecting the plans of buyers and sellers, can be used to graphically demonstrate market equilibrium.

If we compare the planned quantities of sales at each price with the planned quantities of purchased goods at the same prices, we will notice that there is only one price at which the plans of sellers and buyers coincide. This price - $0.40 per pound - is the equilibrium price. If all buyers and sellers build their plans, taking into account the indicated price, then no one will have to change lanes on the go.

Commodity deficit. Let's assume that the price is only $0.20 per pound, and at this price consumers plan to buy 2.5 billion pounds of product per year, but sellers plan to offer only 1.5 billion pounds to the market. When the quantity demanded exceeds the quantity supplied, the difference is called excess demand, or deficit. In most markets, the first sign of a shortage is a sharp decrease in inventory, that is, those funds of goods that are already produced and ready for sale or use. Sellers usually keep some goods in stock in order to quickly respond to minor changes demand.

When the number of stocks decreases and falls below the planned, the sellers change their plans. They may try to replenish stocks by increasing output or, if they do not manufacture the item themselves, they may increase the order to the manufacturer. Some sellers will capitalize on the increased demand by increasing the price because they know buyers are willing to pay more. But whatever the details, the result will be a move up the supply curve as the price and quantity of the good increases. Since the deficit puts pressure on the price from below, buyers will also be forced to change their plans. As they move to the left and up the demand curve, they will cut back on their consumption. As a result of changes in the plans of buyers and sellers, the market comes to equilibrium. When the price reaches $0.40 per pound, the deficit will disappear.


Deficit in the service market. In most markets, sellers have inventory, but inventory is not possible in service markets—hairdressers, laundries, and so on. In markets where there is no stock, the sign of shortage is the line of buyers. A queue is a sign that, given the prevailing price, buyers are willing to consume the good faster than producers plan to put it on the market. However, customer requests may not always be met immediately. Customers are served on a first come, first served basis.

Excess goods. Having considered the situation when sellers and buyers expect a price lower than the equilibrium one, let us consider the opposite case. Suppose that for some reason, buyers and sellers expect that the price will be higher than the equilibrium price ($0.60 per pound) and plan their activities accordingly. When the quantity supplied exceeds the quantity demanded for a good, there is excess.

Excess and inventory. When there is a surplus of product, sellers cannot sell everything they hoped to sell at a given price. As a result, their inventory increases and soon exceeds the level that was planned in case of normal changes in demand. Sellers will respond to inventory growth by changing their plans. Some of them will reduce the output of goods. Others will lower prices to encourage the consumer to consume more, and thus reduce their excess inventory. Others will do both. As a result of these changes, there will be a movement to the left and down the supply curve. As overstocking puts pressure on the price from above, buyers also change their plans. Convinced that the product is cheaper than they expected, they move down and to the right on the curve, the market comes into equilibrium.

The market is a mechanism of interaction between buyers and sellers realizing their economic interests. The economic interest of buyers is to buy goods cheaper and satisfy their needs, so they offer prices for them, called demand prices. Under demand price is understood as the maximum maximum price at which the buyer still agrees to purchase goods. Sellers are interested in selling goods at a higher price and therefore present offer prices , representing the minimum prices at which they are still willing to sell their goods. The intersection of the economic interests of buyers and sellers, the interaction of supply and demand can be represented by combining the graph of their curves.

R 2 A B

P 1 E

R 3 C D

0 Q1 q

When the interests of producers and consumers coincide, a market equilibrium arises, reflecting the equality of desires and opportunities for sellers and buyers. Point E, at which the demand and supply curves intersect and their interests coincide, is called the market equilibrium point, and the corresponding price P 1 is called the equilibrium price. Equilibrium price is the price at which the quantity of a commodity offered on the market is equal to the quantity of a commodity demanded.

When the market price is set above the equilibrium (P 2 > P 1), then supply exceeds demand, since an increase in price, according to the law of supply, will stimulate an increase in production, and according to the law of demand, it will reduce the desire to purchase goods. As a result, there is excess goods(from A to B), which will lead to overstocking of the market.

In this case, competition begins between the sellers of this type of product, which will help reduce the price and bring it closer to the equilibrium point E.

If the market price is set below the equilibrium price (Р 3<Р 1), то это в соответствии с законом спроса побуждает покупателя наращивать объем покупок, но по закону предложения приводит к снижению деловой активности производителя. В итоге спрос превысит предложение (от С до D), то есть возникнет shortage of goods. This intensifies competition between buyers, which leads to higher prices, expansion of production and the return of prices to its equilibrium value. The market price cannot rise above the equilibrium price, because the buyer simply does not have enough money to purchase the goods.

Thus, thanks to the manifestation of the laws of demand, supply and competition, market equilibrium is restored.

Topic 5. Basics of the behavior of subjects of a market economy

Topic plan

1. The concept of a rational consumer. total and marginal utility. Law of diminishing marginal utility.

2. Organization (firm) as an economic entity.

3. Production function. Total, average and marginal product. Law of diminishing marginal productivity.

4. The concept and classification of costs.

5. Income and profit of the firm. profit maximization rule.

Demand - the desire and ability of consumers to purchase certain goods in given economic conditions. Availability of demand depends on the needs of buyers.

Size (volume) of demand - some number of goods, cat-e consumer, consumer group or population buys by definition. price per unit of time under given conditions.

IN market conditions, demand is effective demand , which is determined by the amount of money that the buyer is willing to spend on the purchase of goods.

The amount of demand for a product depends on various factors, primarily on the price of this product: Qdx = f(px), where Qdx – quantity demanded for a product X; Rx-the price demanded for the product X.

Ask price – the maximum price that the buyer agrees to offer for a unit of goods at a certain point in time. The higher the price of the goods, the less the ability and desire of the consumer to buy this product (unless, of course, the latter can be replaced by some other). This functional dependence is the content law of demand : ceteris paribus than the higher the price of a good, the lower the demand for it, and In other words, the lower the price, the greater the quantity demanded.

When demand goes down , on the graph the demand curve shifts Xia left-down (from position D 1 to position D 2), not necessarily parallel to the original position.

sleep a decrease in demand means that for the same price (for example, P3) the consumer buys a smaller amount of goods - not Q2, aQ1 (curve shift to the left), or for the same quantity of goods (for example, Q2) he is willing to pay a lower price - not P3, but P1(curve shift down).

Sentence - these are specific goods and services that producers are willing and able to produce, as well as sell in given economic conditions. This dependence is reflected in law of supply: with price growth when the quantity supplied increases, when the price decreases, the quantity on offers is reduced.

Combine the market curves on one chart. demand and markets. suggestions. At the point E they will intersect, while supply and demand will be equal and reach the equilibrium output Q e at equilibrium price R e . This point of intersection of the supply and demand curves called the point of a static market equal weight.

Demand and supply in the market fluctuate constantly, and the position of the equilibrium point changes accordingly. In equilibrium, neither buyers nor sellers have incentives to change their behavior, i.e. change in supply or demand. Indeed, all consumers who are willing to pay the unit price R e or higher can buy this product, it will remain too expensive for other buyers.

At the same time, sellers who are able to put goods on the market at a price R e or cheaper, will be able to find a buyer, and other less efficient producers will be forced to leave the market.

The question is How is market equilibrium established? , complex. Suppose manufacturers wish to set a price for their product R 1. At this price, they will be able to put on the market a product in quantity Q 2(point 2). However, at such a high price, buyers will only be willing and able to buy a quantity of Q 1 product (according to point 1 on the demand curve). The market will have surplus of goods in quantityQ2 – Q1.

Competition between sellers force them to lower their price in order to sell their product. The market price will start to fall, and those sellers who will be unable to reduce the price to the value R e , will leave the market. If the market price falls to the level R2, then at such a low price, consumers will demand in the amount Q2 (dot 4). But the producers will be able toput only a small amount of goodsQ1 (point3), and onmarket will ariseshortage of goods , as a result of competition between buyers, prices will rise to the level R e .

Commodity surpluses and shortages

Purchasing planning based on inaccurate data can lead to incorrect determination of the necessary stocks of goods. The management of surplus consumer goods is not particularly difficult and is solved by reducing the volume of purchases and thus bringing the inventory to a normal level. Surpluses of goods that are not in consumer demand increase the costs of the enterprise for their storage and require the development of special measures for their implementation.

Irregularity in the supply of goods leads to a shortage of inventory in the warehouse and creates significant difficulties in meeting the needs of customers. When there is a shortage of goods, the wholesaler either refuses to serve consumers or finds ways to meet their needs by making special purchases that require additional capital investment.

Irregular deliveries of goods require the creation of reserve stocks sufficient to meet the needs of consignees in the period between deliveries.

balance on the market is called situation when sellers offer for sale exactly the amount of a good that buyers decide to buy ( the volume of demand is equal to the volume of supply ).

Since sellers and buyers want to sell or buy different quantities of a good depending on its price, for market equilibrium it is necessary that a price be established at which the volumes of demand and supply coincide. In other words, the price equalizes the volumes of supply and demand.

The price that causes the volumes of demand and supply to coincide is called the equilibrium price, and the volumes of demand and supply at this price are called the equilibrium volumes of supply and demand.

Under equilibrium conditions, the so-called clearing of the market occurs: there will be no unsold good or unsatisfied demand (buyers who want to buy the good at the established price and who are unable to do this due to the lack of sellers) will remain on the market.

Thus, in order to find equilibrium in the market for a certain good, it is necessary to determine what price will cause in this market such a volume of supply that will correspond to the volume of demand: at this price, sellers will bring to the market exactly as much of the good they have produced as buyers want to carry away. Such a price is called the equilibrium price, and the volume of supply and demand corresponding to it: the equilibrium volumes of supply and demand.

The speed with which the market finds an equilibrium price depends on the "mobility" of its participants and on the ease of information transfer in the market (that is, on the perfection of the market).

Under the equilibrium of the sectoral market understand the optimization of the size of firms in a given industry while reducing the price in the industry market to the level of the minimum average cost of production. Equilibrium in an industry is reached when each firm reaches its own equilibrium.

Demand curve industry shows how many goods will be purchased by all consumers. It decreases as consumers buy more goods at a lower price. The price here is determined by the interaction of all firms and consumers in the market, and not by the decision of an individual firm.

Industry Supply Curve shows the volume of output carried out by the industry at each possible price. The output of an industry is the total supply of all individual firms.

Sectoral equilibrium occurs when the terms:

All industries maximize profits.

All factors of production become variable and the number of firms in the industry changes.

No firm has an incentive to enter or exit the industry, as all firms earn zero economic profit. In other words, the price should be equal to the average total cost. Since entering and exiting an industry is fairly easy, positive or negative economic profits spur firms to change. An industry cannot be in equilibrium if firms are in motion: either entering the industry or leaving it. Long-term equilibrium requires that all changes in the industry be completed.

The price of a good is such that aggregate supply equals aggregate demand.

Thus, the equilibrium of an industry market is understood as the optimization of the size of firms in a given industry while reducing the price in the industry market to the level of the minimum average production costs. Industry equilibrium occurs when the following conditions are met: all industries maximize profits; all factors of production become variable and the number of firms in the industry changes; no firm has an incentive to enter or exit the industry; the price of a good is such that aggregate supply equals aggregate demand.

Market equilibrium can only be considered with respect to a fixed unit of time. At each subsequent moment of time, market equilibrium can be established as some new value of the market equilibrium price and the number of sales of goods at this price, which are formed during a month, season, year, series of years, etc. but market equilibrium is always a state of the market in which QD = QS (demand = supply). Any deviation from this state sets in motion forces that can return the market to a state of equilibrium: eliminate the shortage (QD > QS) or excess (surplus) of goods on the market (QD< QS).

Thus, a surplus occurs if, at a certain price, the supply of a good exceeds the demand for it.

A good is in short supply if the quantity demanded for the good is greater than the quantity supplied.

Consumers do not always believe that existing prices are optimal. The fact is that the imperfection of the social structure of production appears on the surface as the imperfection of the price system. Public dissatisfaction with existing equilibrium prices forms a fertile ground for government intervention in market pricing. In practice, this results in the establishment of maximum or minimum prices. If the maximum price set by the state ("price ceiling") is below the equilibrium level, then a deficit is formed, if the state sets a minimum price above the equilibrium level (the so-called subsidized price), then a surplus is formed. Fixing prices means turning off the mechanism of market coordination. In conditions when the price is below the equilibrium level, the deficit does not weaken, but increases, moreover, non-monetary costs are added to the consumer's monetary costs. The latter are associated with the search for goods, standing in lines, etc. - they are all deadweight costs that do not serve to expand the production of scarce goods. They settle in the sphere of distribution of a scarce commodity, and do not reach those who actually produce it. The price ceiling "cuts" the surplus of producers and thereby reduces the incentives for its production at those enterprises that have the lowest production costs of this product. Therefore, the deficit does not decrease. On the contrary, those who sell (or distribute) a scarce product are interested in preserving it, since it becomes a source of their income (because it increases the size of non-monetary costs.) Therefore, they will in every possible way promote state regulation prices under various "plausible" pretexts.



In cases where the price is above the equilibrium, there is a need for additional incentives to restrict supply and increase demand in order to reduce the gap between the subsidized and equilibrium prices. In both cases market economy becomes less efficient than under perfect competition.

The balancing function is performed by the price, which stimulates the growth of supply when there is a shortage of goods and unloads the market from surpluses, holding back supply. According to Walras, in conditions of scarcity, the active side of the market is buyers, and in conditions of excess, sellers. According to Marshall's version, the dominant force in the formation market conditions are always entrepreneurs.

Any surplus of goods, i.e. commodity surplus, pushes the price of goods down to the point of equilibrium. Any commodity shortage, shortage of goods on the market will push the price of goods up, to the point of equilibrium of supply and demand. Eventually set up equilibrium price PE, at which QE of goods will be sold on the market.

 

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