An equilibrium price is one for which there is no pressure for further price changes. Disequilibria Price above equilibrium price quantity supplied exceeds quantity demanded sellers have a surplus of the product competition among sellers to eliminate excess inventories drives price down towards equilibrium. Price below equilibrium price quantity demanded exceeds quantity supplied buyers face a shortage of the product competition among buyers to acquire the scarce product inventories drives price up towards equilibrium. Demonstration Problem 2-4 Price Restrictions and Market Equilibrium Scarcity and Rationing Scarcity means that quantities are not sufficient to satisfy all desires. Markets use the price to ration scarce commodities.
Discrimination is often the basis for government price controls.
All rationing mechanisms involve some form of discrimination. Price ceilings are legislatively imposed maximum prices. Set below equilibrium price to be effective. Artificially low price leads to persistent shortage. Low price increases quantity demanded.