what is a surplus?
In: Economics
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Your mommy and daddy give you ten dollars to open up a lemonade stand. So you go out and you buy cups and you buy lemons and you buy sugar. And now you find out that it only costs you nine dollars.
Michael: Ho-oh!
Oscar: So you have an extra dollar.
Michael: Yeah.
Oscar: So you can give that dollar back to mommy and daddy, but guess what? Next summer…
Michael: I’ll be six.
Oscar: And you ask them for money, they’re gonna give you nine dollars. ‘Cause that’s what they think it costs to run the stand. So what you want to do is spend that dollar on something now, so that your parents think it costs ten dollars to run the lemonade stand.
Michael: So the dollar’s a surplus. This is a surplus.
A surplus is when the quantity of of a product supplied is greater than the quantity of a product demanded. In simpler terms, it’s when you have more stuff than people are willing to buy.
When this happens the people who are trying to sell will generally lower the price so that more people will buy the product.
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