<P> In economics, an excess supply or economic surplus is a situation in which the quantity of a good or service supplied is more than the quantity demanded, and the price is above the equilibrium level determined by supply and demand . That is, the quantity of the product that producers wish to sell exceeds the quantity that potential buyers are willing to buy at the prevailing price . It is the opposite of an economic shortage (excess demand). </P> <P> In cultural evolution, agricultural surplus in the Neolithic period is theorized to have produced a greater division of labor, resulting in social stratification and class . </P> <P> Prices and the occurrence of excess supply illustrate a strong correlation . When the price of a good is set too high, the quantity of the product demanded will be diminished while the quantity supplied will be enhanced, so there is more quantity supplied than quantity demanded . The occurrence of excess supply either leads to the lowering of the price or unsold supply, the latter reflecting excess supply . Lowering the price of a good encourages consumers to purchase more and suppliers to produce less . </P> <P> A disequilibrium occurs due to a non-equilibrium price giving a lack of balance between supply and demand . Excess supply is one of the two types of disequilibrium in a perfectly competitive market, excess demand being the other . When quantity supplied is greater than quantity demanded, the equilibrium level does not obtain and instead the market is in disequilibrium . An excess supply prevents the economy from operating efficiently . </P>

If there is an excess supply of a good then the problem of scarcity does not apply to that good