Commodity deficiency and commodity surpluses: definition and consequences

As you know, the market, in the economic sense of the word, operates under certain rules and laws that regulate supply and demand, price, shortage of goods or surplus. These concepts are key and affect all other processes. What is the commodity deficit and surplus, as well as the mechanisms for their appearance and elimination are discussed below.

Basic concepts

The ideal situation in the market is the same quantity of goods offered for sale, and buyers who are ready to purchase it for a fixed price. This correspondence between supply and demand is called market equilibrium. The price that is established under these conditions is also called the equilibrium price. However, such a situation can occur only at a particular point in time, but can not last a long period. The constant change in demand and supply due to a number of variable factors causes an increase in demand, then supply. So there are phenomena called commodity deficits and commodity surpluses. The first concept determines the excess of demand over supply, and the second - exactly the opposite.

The emergence and elimination of shortcomings in the scale of the market

The main reason why there is a commodity deficit at a certain point in time is a sharp increase in demand, which the supply does not have time to react to. However, with non-interference in the process of the state or insurmountable specific factors (wars, natural disasters, natural disasters, etc.), the market is able to independently regulate this process. It looks like this:

1. Demand is increasing and there is a commodity deficit.
2. The equilibrium price is growing, which pushes the manufacturer to increase output.
3. The quantity of goods on the market is increasing.
4. There is a commodity surplus (surplus).
5. The equilibrium price falls, which initiates a reduction in production volumes.
6. The state of supply and demand is stabilizing.

Such processes occur on the market continuously and are part of the country's economic system. However, if there is a deviation from the above scheme, there is no regulation, the consequences can be very complex: a constant and significant shortage of goods of one group and an excess of another, an increase in the discontent of the population, the appearance of shadow schemes of production, supply and sale, etc.

An example from the recent past

Commodity deficits can also occur for reasons of excessive intervention in market processes, which often occurs in a planned or command economy. A vivid example of this is the lack of food and food products in the 80s in the USSR. Too large, loaded and completely non-flexible system for planning production and purchases, together with the growing prosperity of the population and the availability of free cash, led to the fact that the shelves were empty, and for any products, with its availability, huge queues were built. Producers did not have time to meet the needs of the consumer, because they could not respond quickly to demand - all processes were strictly subordinated to bureaucratic procedures that lasted too long and could not meet market requirements. Thus, for a fairly long period of time, a permanent commodity deficit has been established throughout the country. Command economy to cope with this phenomenon is difficult due to the above factors, so solve the problem can be either a complete restructuring of the system, or its replacement.

The phenomenon in microeconomics

Commodity deficiency can arise not only in the scale of the economy of the whole country, but also in individual enterprises. It is also temporary and permanent, characterized by a lack of finished products to cover the demand for it. But unlike macroeconomic processes in the enterprise, the balance of stocks and demand on the contrary depends on the quality of planning. True, the speed of the reaction of production to market changes is also important. At the microeconomic level, the commodity deficit has a number of consequences: a shortage of profit, the probability of losing both permanent and potential buyers, a deterioration in reputation.

The causes and consequences of the surplus

Exceeding the supply of any product or group over demand causes surpluses. This phenomenon is also called a surplus. The emergence of surplus in a market economy is a natural process - a consequence of a disturbance of equilibrium - and is independently regulated by the following way:

1. Decrease in demand or excess supply.
2. The emergence of a surplus.
3. Decrease in the market price.
4. Decrease in output and supply.
5. The growth of the market price.
6. Stabilization of the state of supply and demand.

In a planned economy, commodity surpluses are the result of incorrect forecasting. Since such a system is unable to self-regulate due to excessive intervention, the surplus can last for a long time without the possibility of its settlement.

Surplus on the scale of the enterprise

A surplus within a single enterprise also exists. Commodity deficits and excess in microeconomics are regulated not by the market, but by "manual", i.e. First of all, planning and forecasting. If mistakes are made in these processes, in time not realized production forms surpluses which can lead to monetary losses. This is particularly acute for food companies and others, the period of sale of goods is small. Also, the surplus can cause significant harm to the financial stability of production, whose products are seasonally dependent.

Solving the problem of the equilibrium of supply and demand once and for all is impossible neither in the scale of the country, nor within an individual enterprise. In addition, such a decision is not required, since deficits and excesses are important processes that, among other things, stimulate the development of the economy and production, as well as interstate trade and relations in the context of exports and imports.