Excess supply is defined as the amount by which

• A. Equilibrium Price exceeds price
• B. Demand exceeds supply
• C. Supply exceeds demand
• D. Demand equals supply

Answer: (C)

Excess supply occurs when sellers are willing to sell more than buyers are willing to buy at the current price. In other words, it’s the surplus: the quantity supplied minus the quantity demanded. So the amount of excess supply is exactly the difference by which the quantity supplied exceeds the quantity demanded. If demand were higher than supply, that would be excess demand (a shortage); if they were equal, there would be no excess; and saying the equilibrium price exceeds price isn’t the definition of a surplus.