Oversupply is when there's too much of something available compared to how much people actually want or need. When farmers grow more corn than anyone can buy, or when stores stock more winter coats than customers will purchase, that's an oversupply.

The consequences of oversupply can be serious. When there's an oversupply of a product, its price usually drops because sellers compete to find buyers. This might sound great if you're shopping for video games during an oversupply, but it creates real problems for the people trying to sell them. A dairy farmer facing an oversupply of milk might have to throw it away because it spoils before anyone buys it, losing money on all that wasted work.

Oversupply often happens when many producers make the same optimistic predictions. If every bakery in town expects a huge demand for birthday cakes next month and doubles their baking, they might all end up with an oversupply when normal demand returns.

The opposite problem, undersupply or shortage, occurs when there's not enough of something to meet demand. Finding the right balance between supply and demand is one of the fundamental challenges in economics and business.