Excess Supply

When there’s too much to go around...and nobody wants anymore...we’ve got excess supply.

Excess supply means the market is out of whack...out of equilibrium. You can look at excess supply from the quantity perspective and the price perspective. The quantity perspective is that suppliers just made too much of the good compared to the market demand for it. Whoops. The price perspective is that suppliers are keeping the price too high. If they lowered the price, demand for the good would increase, and people would buy all of that excess supply.

Of course, firms don’t want to lose money, and if they’d have to lower prices so much that they’re cutting into profits...well...another oops moment.