Short Answer 
Excess supply occurs when the quantity supplied exceeds quantity demanded, leading to a surplus and a likely fall in prices. As producers reduce prices to sell excess inventory, demand decreases due to higher prices, creating a cycle of further excess supply and declining prices.
Step 1: Understanding Excess Supply
When there is a change in the quantity demanded and supplied, the outcome is termed as excess supply. This situation occurs when the quantity supplied exceeds the quantity demanded at a given price point. Producers want to sell more at higher prices, but consumer demand drops, leading to a surplus of goods in the market.
Step 2: Analyzing Price Movements
According to the data, when there is excess supply, the price of the good is likely to fall. This is driven by the basic principles of supply and demand, where prices decrease in response to lower consumer interest. In essence, as suppliers try to sell off their excess inventory, they reduce prices to attract more buyers.
Step 3: Impacts of Price Changes on Demand and Supply
The relationship between price changes and quantity demanded can be illustrated through the laws of supply and demand. As the price increases, demand tends to fall, leading to a decreased quantity demanded. Conversely, the law of supply states producers are inclined to supply more at higher prices, resulting in further excess supply, which contributes to the price drop.