If there is excess supply at a given price, then how will the equilibrium price be reached? Explain by diagram.

Explanation

Excess supply is a situation where the quantity supplied of a commodity is more than the qunatity demanded of the commodity. This leads to a competition among sellers leading to a fall in the price. This fall in price causes an increase in quantity demanded and a fall in quantity supplied. A new equilibrium is achieved at a point where quantity demanded equals the quantity supplied.