Question

What causes surpluses? Describe three real world surpluses that you have encountered in your own personal or professional life.

Answer 1

A Market Surplus occurs when there is supply exceeds the quantity demanded. The main causes of surplus are over production, lack of demand for the product, cost - too high, changing market requirements and competition

For example:

1) In my personal life when I make household budget; and expenses are less than income it creates surplus funds that can be used in future years

2) I own an insurance company and surplus is created when there are excess of the assets over the liabilities for a given period

3) When the oil price per barrel decreases below what the consumer is used to paying, I will earn a surplus.