<p>Excess demand is the function describing the amount of quantity demanded above quantity supplied at each price level. Mathematically, it is allowed to be negative (so then we have excess quantity supplied actually).  </p>

<p>Remember that the Walrasian construct imagines an "auction" situation when transactions do not take place as long as the market doesn't clear. So somebody (the "walrasian auctioneer") "announces a price, and buyers declare their desired quantities at that price and sellers declare the quantities they want to sell at that price. If the sum of quantities demanded exceeds the sum of quantities supplied, the excess demand function is strictly positive at that price.</p>

<p>A classic case of real-world strictly positive excess quantity demanded is a very large discount a shop may give for an item, but having decided a priori the pieces it will sell at that prices (the desired quantity supplied at the price). The price may be so low that customers may demand more than the quantities that the store desires to sell at that price.</p>

CC BY-SA 4.0
2018-07-17T23:38:14.237Z
2018-07-17T23:44:02.223Z
2018-07-17T23:44:02.223Z
Alecos Papadopoulos
<p>I've been reading up on Walras' Law and thought I understood it pretty well. However one of my friends asked me point blank what is an example of excess demand or excess supply is and I had some difficulty answering and realized I had no clue.</p>

<p>What are examples of excess demand and excess supply?</p>

CC BY-SA 4.0
2018-07-17T06:44:18.003Z
Are demand and supply more practical for you?
Michael Greinecker
CC BY-SA 4.0
2018-07-17T12:35:50.447Z
@MichaelGreinecker its the basics of price determination. I guess I don't know how we determine whether there is an excess or not?
EconJohn
CC BY-SA 4.0
2018-07-17T12:38:10.840Z
If you know what demand is and what supply is, you know what demand minus supply is. There's nothing more to it.
Michael Greinecker
<microeconomics><walrasian>
What is excess demand/ excess supply?
EconJohn
# What is excess demand/ excess supply?

(Asked by: username_0 on 2018-07-16)

I've been reading up on Walras' Law and thought I understood it pretty well. However one of my friends asked me point blank what is an example of excess demand or excess supply is and I had some difficulty answering and realized I had no clue.

What are examples of excess demand and excess supply?

**Tags:** microeconomics, walrasian

> **Comments:**
> **username_1**: Are demand and supply more practical for you?  
> **username_0**: @MichaelGreinecker its the basics of price determination. I guess I don't know how we determine whether there is an excess or not?  
> **username_1**: If you know what demand is and what supply is, you know what demand minus supply is. There's nothing more to it.  

---

## 1 answers

### Answer by username_2 on 2018-07-17. Score: 1

Excess demand is the function describing the amount of quantity demanded above quantity supplied at each price level. Mathematically, it is allowed to be negative (so then we have excess quantity supplied actually).

Remember that the Walrasian construct imagines an "auction" situation when transactions do not take place as long as the market doesn't clear. So somebody (the "walrasian auctioneer") "announces a price, and buyers declare their desired quantities at that price and sellers declare the quantities they want to sell at that price. If the sum of quantities demanded exceeds the sum of quantities supplied, the excess demand function is strictly positive at that price.

A classic case of real-world strictly positive excess quantity demanded is a very large discount a shop may give for an item, but having decided a priori the pieces it will sell at that prices (the desired quantity supplied at the price). The price may be so low that customers may demand more than the quantities that the store desires to sell at that price.


---

