A situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance.

  • If the supply of mortgage credit to potential homebuyers is rationed, this will decrease the demand for newly built houses.
  • If laborers cannot supply all the labor they wish to, they will have constrained income and their demand in the goods market will be lower.
  • If employers cannot hire all the labor they wish to, they cannot produce as much output as they wish to, and supply in the market for their good will be diminished.

Comment Stream