Excess demand and excess supply refer to situations in which the quantity of goods or services demanded or supplied is not equal to the quantity available at a given price.

Excess demand occurs when the quantity of goods or services demanded by consumers is greater than the quantity available at the current market price. This can lead to shortages, as consumers are unable to purchase the goods or services they want. In such a situation, the price of the goods or services may increase, which could reduce demand and increase supply.

Excess supply occurs when the quantity of goods or services supplied by producers is greater than the quantity demanded by consumers at the current market price. This can lead to a surplus of goods or services, as producers are unable to sell all of their products. In such a situation, the price of the goods or services may decrease, which could increase demand and reduce supply.

Both excess demand and excess supply can have significant impacts on the market, leading to changes in prices, production levels, and consumer behavior. It is important for producers and consumers to be aware of these situations and to adjust their strategies accordingly.