how is disequilibrium resolved 
disequilibrium is a result of a mismatch between the market forces of supply and demand the mismatch is generally resolved through market forces or government intervention in the example of the labor market shortage above the excess labor supply situation can be corrected either through policy proposals that address unemployed workers or through a process of investment in training workers to make them fit for new jobs within a market innovations in manufacturing or supply chain or technology can help address imbalances between supply and demand for example suppose the demand for a company s product has receded due to its expensive price the company can regain its share of the market by innovating its manufacturing or supply chain processes for a lower product price the new equilibrium however might be one where the company has a greater supply of its product in the market at a lower price real world exampledisequilibrium can happen relatively quickly in an otherwise stable market or can be a systematic characteristic of certain markets as an example of the former flash crashes are examples of market disequilibrium involving a mass of sequential sell orders that clear all bids causing prices to fall dramatically in a rapid downward spiral made worse by algorithmic trading systems that detect the selloff and introduce new automated sell orders the first prominent flash crash occurred shortly after 2 30 p m est on may 6 2010 when the dow jones industrial average fell more than 1 000 points in just under 10 minutes the biggest drop in history at that point within the hour the dow jones index lost almost 9 of its value over one trillion dollars in equity was evaporated although the market regained 70 by the end of the day 1initial reports claiming that the crash was caused by a mistyped order proved to be erroneous and the causes of the flash were attributed to a u k futures trader who later pled guilty for attempting to spoof the market by quickly buying and selling hundreds of e mini s p futures contracts through the chicago mercantile exchange cme according to an investigative report by the u s securities and exchange commission sec the flash crash of 2010 was triggered by a single order selling a large amount of e mini s p contracts that created an unstable disequilibrium 1disequilibrium faqs