What term describes the condition in which demand exceeds supply?

• A. Scarcity
• B. Surplus
• C. Demand
• D. Inflation

Answer: (A)

When demand outstrips what’s available, the market experiences a shortage—an excess demand where buyers want more than suppliers are willing or able to offer at the current price. This imbalance pushes prices up and prompts producers to raise supply or prices until supply and demand move toward balance. Scarcity, by contrast, is the broader reality that resources are limited relative to wants; it’s a constant background condition, not the specific imbalance at a given price. The other term describes the opposite situation (surplus) or a general price level rise (inflation), not the immediate shortage. So the situation described is best understood as a shortage.