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AMORTIZATION: The process of paying off a debt liability and accrued interest through a series of equal, periodic payments. Car loans and mortgages are two debts commonly paid off through amortization. Your monthly car payment, for example, partially pays for interest accrued on the outstanding balance and partly reduces that balance. Because one payment reduces the outstanding balance, each subsequent payment has a smaller portion for interest. If the proper amortization schedule has been calculated, your loan will be paid off with the last payment.
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                           EXCESS SUPPLY: A disequilibrium condition in a competitive market in which the quantity supplied is greater than the quantity demanded. Excess supply is another way to say surplus. It also goes by the common term of buyers' market. Excess supply is one of two disequilibrium states of the market. The other is excess demand (or shortage). Excess supply emerges in a market when the quantity supplied by the sellers exceeds the quantity demanded by the buyers... at a given market price. Sellers are seeking to sell more of the good than buyers are willing to buy, hence there is an "extra" or "excess" amount of supply.| Excess Supply |  |
Excess supply is illustrated using the market for 8-track tapes displayed in this exhibit. This graph was generated with data from the 88th Annual Trackmania 8-Track Tape Collectors Convention at the Shady Valley Exposition Center.The excess supply for 8-track tapes is indicated as the difference between the quantity supplied and the quantity demanded at a specific market price. In particular, at a 70-cent price, the quantity supplied is 600 tapes and the quantity demanded is 200 tapes. Sellers are willing and able to sell 400 tapes more than buyers are willing and able to buy. Hence this market has an excess supply of 400 tapes. The result of this excess supply is a decrease in the market price. Because sellers are unable to sell as much of the good as they want, they are inclined to bid down the price. Of course, as the price falls, the quantity demanded increases and the quantity supplied decreases, both acting to reduce the amount of the excess supply. Ultimately the entire excess supply is eliminated and equilibrium is restored.
Recommended Citation:EXCESS SUPPLY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 28, 2024].
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Today, you are likely to spend a great deal of time driving to a factory outlet seeking to buy either one of those "hang in there" kitty cat posters or a velvet painting of Elvis Presley. Be on the lookout for high interest rates.
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