Excess demand and deficient demand are two critical concepts in economics that describe imbalances in the market. 

What is Excess Demand?

Excess demand occurs when the quantity demanded of a good or service surpasses its supply at the current price. It is often a result of lower prices, increased consumer income, or shifts in consumer preferences. Excess demand can lead to shortages, which often prompt sellers to raise prices.

Examples of Excess Demand:

1. During a product launch, a new smartphone might face excess demand if the manufacturer underestimated consumer interest.
2. Essential goods like bread or milk may experience excess demand during a natural disaster when supply chains are disrupted.

What is Deficient Demand?

Deficient demand happens when the quantity demanded is less than the quantity supplied at the current price level. This situation is typical during economic downturns or when a product falls out of favor, leading to surplus inventory and often resulting in price reductions or product discontinuations.

Examples of Deficient Demand:

1. Luxury cars might face deficient demand during economic recessions as fewer consumers can afford or are willing to purchase high-end vehicles.
2. Seasonal items like heavy winter coats may have deficient demand in warmer months, leading stores to reduce prices significantly.

Difference Between Excess Demand and Deficient Demand: 

Basis	Excess Demand	Deficient Demand
Definition	Occurs when demand for a product exceeds its supply at current prices.	Occurs when supply of a product exceeds demand at current prices.
Market Condition	Often caused by low prices, high consumer interest, or insufficient production.	Often due to high prices, decreased consumer interest, or overproduction.
Economic Impact	Can lead to inflation if not controlled, as businesses may increase prices.	May lead to deflation as businesses may decrease prices to stimulate demand.
Price Trend	Prices tend to rise as sellers capitalize on the high demand and limited supply.	Prices tend to fall as sellers attempt to clear excess stock.
Examples	A sudden surge in demand for face masks exceeding available supply.	A surplus of luxury goods during an economic downturn leading to price cuts.