• Disequilibrium is when external forces cause an imbalance between supply and demand in the market. In response, the market enters a state in which supply and demand do not match.

  • The disequilibrium is caused by several reasons, from government intervention to labor market inefficiencies and unilateral actions of the supplier or distributor.
  • Disequilibrium is usually resolved when the market enters a new equilibrium state.
  • For example, people are interested in starting to produce more goods at inflated prices, increasing supply to meet demand and reducing the price to its equilibrium state.
  • Examples may include short term scenarios such as flash crashes or long term events such as recessions and depressions.