...Market Equilibrating Process Paper ECO/561 February 16, 2011 Market Equilibrating Process Paper Within any process, the achievement of market equilibrating is imperative in the business world. According to McConnell, Brue, and Flynn (2009), “Market equilibrium is a situation where the supply is equal to the demand”. The goal of many organizations is to create and continue to create market equilibrium. In this paper market equilibrating, law of supply and demand and inelasticity vs. elasticity will be furthered discussed. Law of Demand and the Determinants of Demand The quantity demanded falls when the price increases. Whereas, the quantity demanded rises when the price falls. According to McConnell, Brue and Flynn (2009), “Demand is a schedule or curve that reveals the various amounts of a product that consumers are willing to purchase at each of a string of potential prices during a specified period of time. Various prices are selected for a particular product in different quantities for the product. The law of demand is the correlation between the demand of quantity and price. For example, a designer coat is retailed for $200 at a department store in the early winter season. During an after Christmas sale, the coats are reduced by 50% to a cost of $100. This sale created more consumer purchases because the price was reduced. As the price went down, more consumers purchased the shoes. The law of demand was utilized throughout this sale process. Law of Supply...
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...Market Equilibrating Process Student Name ECO/561 Date Peter Oburu Market Equilibrating Process Market equilibrium is defined as a state where the quantity supplied matches the quantity demanded (McConnell, Brue, & Flynn, 2009). In case where there is lack of equilibrium a business can be have a surplus or the buyers could face a shortage. The process in which the market adjust to the demands of market buyers and supply of market sellers is know n as the market equilibrating process. If the market price of a good or service is set above market equilibrium price, the demand will be less than the supply and the net effect will be a surplus. On the other hand, the market price of a good or service is set below the market equilibrium price, the demand will be greater than the quantity supplied and the net effect will be a shortage. For a business either of these scenarios can be detrimental, therefore it is very important that a business owner set their price at the market equilibrium, which is the ideal price for both business (suppliers) and the consumers. This paper provides an example of how the market equilibrating process works for a martini lounge. The paper proceeds as follows; first we describe ... then we highlight ... and finally we conclude that ... As the owner of a restaurant, I have to pay very close attention to pricing in an effort to ensure a steady flow of customers and to build profitability. The type of restaurant I own can be classified and...
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... Market Equilibrating Process EC0/561 April 12, 2012 Professor Sella-Villa Abstract The purpose of this paper is to explain the market equilibrating process in relation to my personal experience supported by academic research. The following factors will be included in my explanation: law of demand and the determinants of demand, law of supply and the determinants of supply efficient markets theory and surplus and shortage. Market Equilibrating Process Not since the Great Depression of the late 1920’s that carry over into the 1930’s has the United States experience an economic downfall like our current economy recessions that we are recovering from that started in 2008. Understanding what an economic depression is will help individuals deal with their own economic experiences. Economics is the social science that examines how individual’s institutions and society make optimal choices under conditions of scarcity, (McConnell, Brue, Flynn, 2009). The two stakeholders that contribute to the market equilibrium process are the supply from the producer and demands from the consumers. The equilibrium process is equal when the producer and consumer needs are balance. Producers and consumers competition off sets the equilibrium process, producers with larger inventories are force to decrease their prices to undersell their competition. Consumers benefit...
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...Running head: MARKET EQUILIBRATING PROCESS PAPER 1 Market Equilibrating Process Paper MJ Meade ECO/561 Economics April 22, 2011 Professor Sangeeta K. Bishop Market Equilibrating Process Paper 2 Identifying equilibrium in a market is comparable to identifying equilibrium in our personal lives and experiences. In the process of losing a job or transferring to a new career, we experience equilibrium. With a new job comes new luxuries but in the event of the loss of job comes cutbacks until finances have improved and in equilibrium. The present economic times have caused a state of disequilibrium for people. People are collecting credit card debt, losing their homes and go into foreclosure. In this paper, the subject to be discussed is the housing market equilibrium. It is very important to comprehend the supply and demand of the housing market. Not many years ago, house prices were increasing as such a force that the demand exceeded the supply. Housing construction exploded and people were acquiring easy loans and numerous people were flipping properties expecting the market to continue to explode. Just as the market exploded the market crashed, and home values decreased. Investments in the market stopped. Housing supply surpassed the demand and prices decreased drastically. Almost immediately, there was a...
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...Market Equilibrating Process ECO/561 - Economics , Instructor This paper will explore the market equilibrating process and relate this process to a personal experience that has occurred in my life. According to the assigned reading, the equilibrium price for a product is the price at which the demand and supply curves intersect. In competitive markets, prices that are higher than the equilibrium price will result in a surplus and the market price will fall. When the market price is lower than the equilibrium price, a shortage will exist and the market price will rise. The equilibrium price is stable under existing demand and supply conditions. At equilibrium, no tendency for price to change is expected. Changes in supply or demand will cause predictable changes in both the equilibrium price and quantity. (McConnell, Brue, & Flynn,2009). To find market equilibrium, the two curves are combined on one graph. The place of meeting point of supply and demand indicates the equilibrium point. Unless interfered with, the market will remain at this quantity and price. At the point of connection, sellers and buyers see eye to eye on the quantity and price. Relating this process to my personal life experience, I look at the housing marketing. I worked for five years as a licensed Real Estate Agent. When I started in the business, it was booming. It was definitely a seller’s market. The demand was high for mega houses, condominiums and investment properties...
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...Market Equilibration Process Paper David Campbell ECO/ 561 May 6, 2013 Professor Maria H. Ramjerdi Market Equilibration Process Paper There are many things that come with learning the concepts of supply and demand. It for one helps many people who are corporation owners have to the capability to make best of their income. The Market Equilibrating Process to us all is “the interaction of market demand and market supply adjusts the price to the point at which the quantities demanded and supplied are equal”, known as equilibrium price. Also known is that equilibrium quantity relates to corresponding quantity. A change in either demand or supply changes the equilibrium price and quantity (McConnell, Brue, & Flynn, 2009). Throughout this paper I will not only speak on market equilibrating process but also give my experience. The market equilibrating process is experienced many times through people’s lives but for me I see most examples through my finances. If looking at a supply curve, you would see my earnings and revenue. My amount outstanding and disbursements would be look at as my demand curve. The moment when my income reaches the same amount as my debts then that is known to be my equilibrium point. The equilibrium point is where I see the amount I am able to pay for with my balance due and income. Throughout understanding this concept I have noticed that there are many different things that can affect the curve for supply and demand. One thing that damages...
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...Market Equilibration Process Paper The market equilibration provides opportunity for business organization to adapt to various changes that happens in the market in their field. To guide the management in adjusting to the demands by adjusting the supply to create market equilibrium. This will enable the producers and purchasers to be on the same par on price and products. Law of Demand For equilibrium to exist there must be a demand of the product or products or services. There must be willing buyers with available resources to purchase the products or services at the agreed price. Once the need has been established, the products can be produced or developed. Law of Supply The product is supplied to the market at the price the consumer is willing to pay, and this thus creates market equilibrium. In a situation in which there is an imbalance in one side, the equilibrium is affected, and there is a shift more to once side. In a situation of this nature there may be a shortage of supply and may cause price increase that may result in competitors coming in to fill the vacuum. The other possibilities are to have excess supply in the market, and this will drop the price of commodity that may cause a big drop in price and will create an imbalance in the equilibrium in the market. Efficient market Theory The efficiency of this theory depends on how effective the market supply respond to the demand and how the consumers perceived and received the products. Surplus and Shortage ...
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...Market Equilibrating Process XXXXXXXX ECO/561 March 4, 2013 XXX Market Equilibrating Process The market equilibrating process is pertinent to all industries. When supply is more than the demand, there is an imbalance. To counter this imbalance, industries work to increase the demand. If the demand gets equal to the supply, there is market equilibrium. To better elaborate this, I would like to discuss about the proposal process. I work in the federal government consulting industry and part of my job also involves in responding to Request For Proposal (RFP) from the government. One section of the response caters to finances, specifically surrounding the amount of money with which the concerned job can be accomplished. Determining the price for the job is what I am going to use for this week’s paper. Law of Demand The major demand determinants in this case include the total budget allocated by the government for the specified work called Government Cost Estimate (GCE), the price quoted by competing vendors, and the total number of competing vendors. If the proposal submitted by my company is within the acceptable range of the government, we are called for subsequent meetings and asked to submit the Best And Final Offer (BAFO). This offer contains the final price that we can accommodate to get the work accomplished. There have been cases when the BAFO submitted...
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...Marketing Equilibration Process Paper ECO/561 Marketing Equilibration Process Paper The market equilibrating process is the method or methods in which manufacturers tend on maintaining a balance between supply and demand reaching equilibrium. This is help by using competition between and among buyers and sellers sets off equilibrium process. For example firms with excess inventories cut prices to try to undersell their competition. As the price falls, quantity demanded rises, and quantity supplied falls. Buyers competing with one another for goods in short supply bid up price to try to capture some of the good as price goes up, demand falls and supply rises (McConnell, 2009). I think looking at an electronic device is a perfect example. Take the IPhone, the new versions are always in demand but the old versions are easily replaced. When AT&T had a monopoly on the IPhone other companies tried to put out products like the droid or update the blackberry so that it was able to compete with AT&T. Now that AT&T does not have the sole contract for this device there is still a demand but it is across the board and not solely with one company. The law of demand also affects the market equilibrating process. The law of demand in theory says that there is a negative relation between price and quantity demanded. For example if price goes up, quantity demanded goes down; if price goes down, quantity demanded goes up (McConnell, 2009). This can be seen when an IPhone was brand...
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...Running Header: Market Equilibration Process Paper Labor Demand and Supply Economics ECO/561 April 21, 2011 Running Header: Market Equilibration Process Paper Introduction The purpose of this paper is to relate the concepts of the market equilibrating process to a prior real-world experience occurring in a free market. The market equilibrating process will be explained and the following components will be considered in the explanation; Law of demand and the determinants of demand, law of supply and the determinants of supply, labor demand and supply. Law of Demand and the Determinants of Demand According to Economics: Principles, problems, and politics, a fundamental characteristic of demand is this: Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. In short, there is a negative or inverse relationship between price and quantity demanded. Economists call this inverse relationship the law of demand and the determinants are the “other things equal” in the relationship between price and quantity demanded (McConnell, Brue and Flynn, 2009). Law of Supply and the Determinants of Supply According to Economics: Principles, problems, and politics, the law of supply states that as price rises, the quantity supplied rises; as price falls, the quantity supplied falls and the basic determinants of supply are, resource prices, technology, taxes and subsidies, prices of other goods, producer expectations, and the number...
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...Marketing Equilibrating Process ECO/561 Laurie Gazzale February 22, 2010 Marketing Equilibrating Process The marketing equilibrium process in Direct Selling Association businesses is analyzed from two perspectives. This paper will review the perspective of the manufacturing company and the individual selling the product. Changes in supply, demand, and equilibrium are addressed. Direct selling home businesses have become more popular as the job market becomes less dependable. With the rise of unemployment and “stay-at-home moms” wanting to contribute to the household income, more families are choosing established at home businesses. One business in particular that has seen record increases is Tastefully Simple. Tastefully Simple is a member of the Direct Selling Association of which policies and procedures are put in place to protect the end user, the consumer. Since the incorporation in 1995, the company has increased from a small, two person operation in Minnesota to a nationwide at-home business consisting of more than 28,000 active consultants in the United States and Puerto Rico (2010, February). Since 1995 the price of the product has increased slightly because of the price in manufacturing costs. For instance, in 1995 the Bountiful Beer Bread had a retail price of $4.99 and just last year increased to $5.49. The increased retail price has not slowed down sales for a large part of the selling audience; however...
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...Market equilibrium is a circumstance in which the quantity of merchandise or services demanded by consumers is equivalent to the quantity supplied by sellers (McConnell, Brue, & Flynn, 2009). The purpose for this paper is to relate the concept of the market equilibrating process to a previous real-world occurrence happening in a free market. The market equilibrating process will be clarified and the following components will be considered in the clarification; law of demand and determinants of demand, law of supply and determinants of supply, efficient markets theory, and the surplus and shortage. Law of demand and determinants of demand Demand is a schedule or a curve that illustrates the assorted quantity of a product that consumers are willing and able to acquire at each of a sequence of probable costs during a specific period (McConnell, Brue, & Flynn, 2009). As price falls, the quantity demanded ascends and as the price rises, the quantity demanded drop. The affiliation among the price and quantity demanded is labeled an inverse affiliation and this Economist call the law of demand. The determinants are the -other things equal- consumers’ preferences, the number of consumers in the market, buyers’ income, the cost of similar goods, and buyer expectations. An example could be the sale of Jordan sneakers. The manager of a chief department store retails Jordan’s for $120 usually, but during their back-to-school sale, the Jordan’s were reduced by 20% making them $96...
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...MARKET EQUILIBRATION PROCESS ABSTRACT Market Equilibrium is a very important topic people face daily in economy. Understanding how market equilibrium is maintained is essential for business managers. This paper will explain the market equilibrating process. It will include the law of demand and determinants of demand; law of supply and determinants of supply. It will also include examples to better present the topic of surplus and shortage. The market of a certain product is in equilibrium when the amount offered of that product aligns with the amount needed. When demand is higher than what is being offered, businesses increase the offered quantities of their product as well the prices resulting in a decrease on demand. When the offer is higher than demand, businesses promote clearance to reduce inventory. Both scenarios show how companies tend to equilibrate price and quantities in the market. Competition among buyers and among sellers drives the price to the equilibrium price; once there, it remains unless it is subsequently disturbed by changes in demand or supply (McConnell, 2009). The law of demand implies that consumers will buy more of a product at a low price than at a high price. So, other things equal, the relationship between price and quantity demanded is negative or inverse and is graphed as a down-sloping curve. Some determinants of demand include: consumer tastes, the number of buyers in the market, consumer incomes, the prices of related...
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...Market Equilibrating Process This paper discusses the relationship between demand and supply, market efficiency, and how these element effect equilibrium quantity and price. In a market environment, supply, and demand interact with one another in local, national, and international market. Demand is the quantity of a product desired by customers, “i.e.” according to McConnell “Demand is the amount of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time” (2009, p. 46). Supply refers to how much of certain goods the market can offer. Demand and supply control the quantity of a product to be sold at given price. When intended price of buyers and sellers matches, the price is said to be at equilibrium. Market Demand and Supply Price Demand Quantity Increase in Demand Quantity Supply Increase in Supply $6.00 20 40 200 240 $5.00 40 60 150 180 $4.00 70 100 100 120 $3.00 110 140 75 90 $2.00 175 200 40 55 $3.00 110 140 75 90 $2.00 175 200 40 55 Fig 1 As explained in Fig 1, price is controlled by supply and demand in the market place. Fig 1 shows current state of market equilibrium at 3.50$ where supply and demand matches. At any above-equilibrium price, quantity supplied exceeds quantity demanded. At $4 price, sellers will produce more quantity of products, than buyers will purchase. The result is a surplus (or excess supply) of products. Surpluses drive prices down. Any...
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...Market Equilibrium Understanding market equilibrium and how to maintain market equilibrium is essential for all business leaders. Market equilibrium is the point at which the demand of the consumers is equal to the supply of the producers. The goal of all organizations is to ensure their output is at market equilibrium, therefore having no surplus or shortage. However, many factors can affect a both demand and supply of a product. This paper will look at the factors which have caused a shortage of bacon and thus changed the market equilibrium. The law of demand states, that all other things being equal, as price falls the quantity demanded rises, and as price rises, the quantity demanded falls. Concurrently, the law of supply states that as price rises the quantity supplied rises, and as price falls, the quantity supplied falls. Additionally, the law or scarcity tells us that for any given period of time we have a finite or scarcity or resources to allocate our unlimited wants. What does this have to do with bacon? Scarcity. As we continue to utilize alternative resources for fuel, many car manufacturers have begun to use ethanol, which is derived from corn. Additionally, an abnormally hot summer has led to shortage of corn. These factors, along with others have led to a shortage of corn; which is used to feed pigs. Less feed for pigs results in smaller pigs. Thus, the shortage of corn has led to a shortage of bacon. A shortage in bacon supply has created a minor...
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