How is equilibrium reached if there is excess demand at a price lower than equilibrium price?

How is equilibrium reached if there is excess demand at a price lower

1.	How is equilibrium reached if there is excess demand at a price lower than equilibrium price?
Answer» Solution :At any price lower than the equilibrium price, quantity DEMANDED of a commodity exceeds its quantity supplied. It is CALLED a situation of excess demand. It is not an equilibrium price because Quantity demanded is equal to quantity supplied at equilibrium price only. Whenever there is excess demand, eqquilibrium will be achieved as explained under. At `OP_(1)`, there is excess demand equal to `M_(1)M_(2)`. Excess demand WOULD create competition among buyers which will push price up from `OP_(1)` to OP. As price rises there would be : extension in supply from B to E CONTRACTION in demand from C to E Hence, equilibrium will be achieved at point E when quantity demanded is equal to quantity supplied.