Surplus
A surplus occurs when quantity supplied exceeds quantity demanded at a given price. This indicates the price is above the equilibrium level and will tend to fall. Surpluses indicate overproduction relative to demand.
Real World
The EU's Common Agricultural Policy historically guaranteed minimum prices for butter, creating a notorious 'butter mountain' surplus that had to be stored in warehouses or dumped on world markets at a loss.
Exam Focus
Show the surplus as the horizontal gap between Qs and Qd above the equilibrium price on your diagram.
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