A car dealer who does not have enough customers for a supply of new cars faces what?
Disequilibrium (a surplus). When the quantity of new cars supplied exceeds the quantity demanded at the current price, the market is out of balance — there are more cars than buyers. This surplus is a state of disequilibrium, not equilibrium.
The answer
A car dealer with more cars than customers faces a surplus, which is a state of disequilibrium. At the current price, the quantity supplied exceeds the quantity demanded: there are unsold cars sitting on the lot because not enough buyers want them at that price.
Equilibrium is the special condition where quantity supplied exactly equals quantity demanded and there is no pressure on price to change. The dealer's situation is the opposite of that, so the correct term is disequilibrium — specifically an excess supply (surplus).
How the market corrects a surplus
Disequilibrium is not permanent; the market pushes back toward equilibrium:
- Unsold inventory piles up, signaling that the price is above the equilibrium price.
- To move the cars, the dealer lowers the price (rebates, discounts, incentives).
- As price falls, quantity demanded rises (more buyers) and quantity supplied falls (some sellers offer fewer).
- Price keeps adjusting until quantity supplied equals quantity demanded again — equilibrium is restored and the surplus disappears.
A shortage is the mirror image: if price is below equilibrium, buyers want more than sellers offer, inventory vanishes, and prices are bid up.
Why the other options are wrong
- Equilibrium is wrong because supply and demand are not equal — there are leftover cars, which is the defining sign of imbalance.
- A shortage / excess demand is wrong because that describes too many buyers for too few goods. Here the dealer has the opposite: too many goods for too few buyers.
- Scarcity is wrong because scarcity is the general economic fact that resources are limited relative to wants — it is not a market condition of unequal quantities at a given price. The dealer is not short of cars; the dealer has too many.
The bigger picture
The key distinction to master is surplus vs. shortage, both of which are forms of disequilibrium:
- Surplus (excess supply): price too high, quantity supplied > quantity demanded, prices tend to fall.
- Shortage (excess demand): price too low, quantity demanded > quantity supplied, prices tend to rise.
Equilibrium is where the two curves cross. Understanding that unsold inventory is a price signal — telling the dealer the price is above equilibrium — is the deeper insight most quick answers skip. The market is self-correcting: the very surplus that troubles the dealer creates the downward price pressure that eventually clears it.
Frequently asked
What is the difference between a surplus and a shortage?
A surplus (excess supply) occurs when quantity supplied exceeds quantity demanded because the price is too high, leaving goods unsold. A shortage (excess demand) occurs when quantity demanded exceeds supply because the price is too low, leaving buyers unserved.
What causes disequilibrium in a market?
Disequilibrium happens whenever the current price is not the equilibrium price, so quantity supplied and quantity demanded are unequal. A price above equilibrium creates a surplus; a price below it creates a shortage.
What happens to price when quantity supplied exceeds quantity demanded?
The price tends to fall. Unsold inventory signals the price is too high, so sellers cut prices, which raises quantity demanded and lowers quantity supplied until the market returns to equilibrium.
How does a market return to equilibrium?
Through price adjustment. A surplus pushes prices down until buyers and sellers balance; a shortage pushes prices up until they balance. The market self-corrects because inventory levels signal whether price is above or below equilibrium.