When the price of Tacos is $1.50, there is a shortage in the market of Tacos of 15 units. In response to the shortage, sellers increase the price of Tacos to $2.50 and the market clears with the corresponding increase in quantity supplied being equal to the quantity demanded at that price. Total surplus in the market for Tacos is maximized when the price of Tacos is more than $2.50   the price of Tacos is $1.50   the price of Tacos is $2.00   the price of Tacos is $2.50

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Market Surplus and Shortage Analysis

In everyday language, a “surplus” indicates that there is an excess of something, while a “shortage” means that there is a scarcity of it. In economics, “market surplus” refers to the condition where the quantity of a certain good more available than what is required or “demanded” by the market. In the same way, a “market shortage” refers to the condition where the quantity of a certain good is less available than what is “demanded” by the market. If quantity in demand is written as Qd and quantity that is supplied is written as Qs, then, the condition Qs > Qd indicates market surplus and condition Qd > Qs indicates market shortage.