With reference to the concept of excess demand, explain how a decrease in supply of a good would lead to a new market equilibrium. Demand can be defined as the quantity of a commodity that consumers are willing and able to buy at a given time and a given price. Quantity demanded and price have an inverse relationship meaning that when the price of a good/service decreases the quantity demanded increase as consumers become more willing and able to purchase the products at a higher price. 0n the other hand, supply refers to the quantity of a commodity that producers are willing and able to supply at a given time at a given price. Supply on has a proportional relationship as the quantity supplied increases with increases in price as producers are willing to supply more at a higher price to increase their profits. Moreover, a market equilibrium is where the quantity demanded of a product and the quantity supplied is equal. When there is a movement from this point, it can result in excess demand which refers to a situation where the price is below its equilibrium price. Therefore, the quantity supplied by producers is lower than the quantity demanded by the consumers. Excess demand in the market: As seen from the above diagram, the supply curve shifted to the left from 31 to 52 signalling a decrease in quantity supplied and an increase in price. When the supply curved shifted to the left, the market found it's new equilibrium at a higher price of P2 instead of the previous P1 and a lower quantity of Q2. Below, the market equilibrium we can see an excess demand, which is caused by the fact that the quantity demanded at a lower price outweighs the quantity supplied