how did excess demand increase the price of a commodity and excess supply decrease the price of commodity
Priya,
Excess demand is defined as the situation, where the market demand exceeds the market supply at a particular market price When there is an excess demand in market, the competition among the buyers increase. Due to this, the buyers will tend to buy the output at a higher price which in turn will increase the market price.
Excess supply is defined as a situation, where the market demand falls short of the market supply at a given price. In this case, competition among the sellers increase which in turn will result in a fall in the market price.
Excess demand is defined as the situation, where the market demand exceeds the market supply at a particular market price When there is an excess demand in market, the competition among the buyers increase. Due to this, the buyers will tend to buy the output at a higher price which in turn will increase the market price.
Excess supply is defined as a situation, where the market demand falls short of the market supply at a given price. In this case, competition among the sellers increase which in turn will result in a fall in the market price.