What term refers to the situation where the quantity demanded exceeds the quantity supplied?

The correct term for the situation where the quantity demanded exceeds the quantity supplied is "Excess Demand." This occurs when consumers want to purchase more of a good or service than what is available in the market at a given price. When there is excess demand, it typically leads to upward pressure on prices, as sellers can raise prices in response to the competition among buyers for the limited goods available.

Understanding excess demand is crucial because it indicates a mismatch in the market, highlighting that consumer preferences are not being fully met by suppliers. This imbalance can prompt suppliers to increase production or new entrants to the market to capitalize on the higher prices resulting from the excess demand.

In contrast, equilibrium refers to the state where quantity demanded equals quantity supplied, leading to stable prices. Disequilibrium describes a situation where the market is not in balance, which could include both excess demand and excess supply, but does not specifically indicate the scenario where demand outstrips supply. A market surplus occurs when the quantity supplied exceeds quantity demanded, leading to a surplus of goods in the market. Each of these terms relates to different aspects of market dynamics, but "Excess Demand" most directly describes the scenario presented in the question.