What term is used to describe a situation when the demand for a good is less than its available supply?

The correct term for a situation where the demand for a good is less than its available supply is surplus. A surplus occurs when the quantity of a good or service provided exceeds the amount that consumers are willing to purchase at a given price. This often leads to an excess in inventory, encouraging sellers to lower prices to stimulate demand and balance the market.

In contrast, deficit refers to the situation where demand outstrips supply, creating a shortage of goods. Equilibrium describes a balanced state in a market where supply and demand are equal, resulting in no surplus or shortage. Scarcity indicates a fundamental economic problem where the resources available are insufficient to meet all human wants and needs, which is different from a surplus. Understanding these distinctions is essential in grasping how markets function and how prices adjust in response to supply and demand dynamics.