Market Equilibrium - surplus AP TOPIC 1.6 In a competitive market, demand for and supply of a good or service determine the equilibrium price. Define Market Surplus. Draw and label the Supply & Demand Market surplus is when there is an excess Curve experiencing a surplus of supply. Explain the what producers must do to regain market equilibrium if there is a surplus.Market Equilibrium - Shortage Dene Market Shortage. Market shortage refers to when there is excess demand for a product but the quantity that is being supplied, is less than the demand. Explain the What producers must do to regain market equilibrium if there is a shortage. Draw and label the Supply & Demand Curve experiencing a shortage. ' 1 l