If excess demand exists in a market, then there are more buyers interested in purchasing a good or service than there are available goods or services for sale at the current price. This creates a situation where buyers are competing with each other for a limited supply of goods or services, which can drive up the price.
In such a scenario, sellers may choose to increase the price of the good or service to take advantage of the excess demand, or they may choose to ration the available supply among buyers. Alternatively, new sellers may enter the market to take advantage of the high demand, which can help to increase the available supply and bring the market back into equilibrium.
In the long run, excess demand in a market can lead to investment and expansion as suppliers seek to capitalize on the opportunities presented by the high demand. However, in the short term, excess demand can lead to price increases, rationing, and other market distortions that can be challenging for both buyers and sellers to navigate.