Ace the A Level Economics AQA Exam 2025 – Power Up and Conquer the Market!

Excess demand occurs when the quantity demanded for a good or service exceeds the quantity supplied at a certain price level. This situation typically arises when the market price is set below the equilibrium price, leading consumers to wish to purchase more than what is available.

In this scenario, suppliers cannot meet the higher demand, resulting in shortages. The effect of excess demand often pushes prices up, as consumers compete to secure the limited goods, eventually leading the market towards a new equilibrium where quantity demanded equals quantity supplied.

The other options illustrate different concepts. For instance, when quantity supplied is more than quantity demanded, it indicates a surplus rather than excess demand. When demand meets supply at equilibrium, it reveals a balance rather than a disparity. Hence, recognizing that quantity demanded being greater than quantity supplied correctly characterizes excess demand.