1. Excess Supply: If the price is set too high, excess supply will be created within the economy and there will be allocative inefficiency. 2. Excess Demand: Excess demand is created when price is set below the equilibrium price. Because the price is so low, too many consumers want the good while producers are not making enough of it.
Shifts vs. Movement
The “movements” and “shifts” in relation to the supply and demand curves represent very different market phenomena:
A movement refers to a change along a curve. On the demand curve, a movement denotes a change in both price and quantity demanded from one point to another on the curve. The movement implies that the demand relationship remains consistent. A movement along the demand curve will occur when the price of the good changes and the quantity demanded changes in accordance to the original demand relationship.
A shift in a demand or supply curve occurs when a good's quantity demanded or supplied changes even though price remains the same.