...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 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 Janica A. Francis ECO/561 May 6, 2013 George Sharghi, Professor There are three players in the market equilibrating process, the Sellers, the Market and the Buyers. The Sellers are the makers, the producers of a product. The Market is the enabler, as it provides venues for the seller’s products to be view and sold by the buyers, the most important player. The Buyers, also known as the consumers, purchase the products marketed in the market at a price that is agreeable to all parties. Competition amongst the seller and buyers initiates the equilibrating process without either participation; the equilibrium process cannot be triggered. The Market Equilibrating Process The business dictionary defines market equilibrium as the current place in which an items supply matches the items demand (Business Dictionary, 2013). Since there is neither surplus nor shortage in the market, price tends to remain stable in this situation. The market equilibrating process is the procedure that suppliers use to reach equilibrium by maintaining a balance between supply and demand. McConnell defines supply is the schedule of quantities of a good and service that people are willing and able to sell at various prices and demanded is the quantities of a product that will be purchased at various possible prices (McConnell, 2009). The consumer’s demand of a service or good and seller’s...
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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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...THE MARKET EQUILIBRATING PROCESS The market equilibrating process is the technique in which producers use to maintain a balance between supply and demand reaching equilibrium. The methods that these producers have deliberated on, while preparing techniques, patterns and strategies which will lead to a maximization of profits as the units sold mirrors the amount that customers are prepared to pay for an item at any given time. This process and variables taken into consideration is the process on the way to equilibrium ("What Is Market Equilibrating Process"). This process is also referred to as a circumstance where the supply of a product is precisely equivalent to its demand. As a result, the price remains steady in this situation as there is no surplus or shortage is reflected in the market. The market has reached equilibrium as the supply and demand curves interconnect. At this point, quantity supplied and the quantity that is demanded is equivalent. Surplus and shortages are detected if the market price is higher than the equilibrium price and the quantity supplied is greater than quantity demanded therefore creating a surplus then the market price will fall. For example, retailers often have surplus of inventory that cannot sell therefore the prices are reduced and placed on sale. Since the price has decreased, the product’s quantity demanded will increase until equilibrium is obtained and as a result, surplus drives price down. Also, if the market price...
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...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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...The Ipad introduced this year with price start from $499(Glenn, 2010). Ipad is ttuched screen mobile laptop with no keyboard and high screen resolution. Ipad is also a e-reader with color screen. Kindle devoted exclusively to digital books however the Ipad has millions of added features and applications in addition to e-reader. Customer tastes has been change to prefer the new Ipad over the Kindle. This change in market force Amazon and Barnes & Nobles to cut their e-reader device to be under the $200. Kindle now sell with 189 and the Nook price is $199 (RTT, 2010). References Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn , 2009. Economics Principles, Problems, and Policies, Eighteenth Edition Glenn Chapman, 2010. Kindle and Nook cut prices in battle with iPad Retrieved June 23, 2010 from http://newsinfo.inquirer.net/breakingnews/infotech/view/20100622-276934/Kindle-and-Nook-cut-prices-in-battle-with-iPad Kunr Patel, 2010. The Kindle Market Is "Too Small" For iPhone Retrieved June 23, 2010 from http://www.businessinsider.com/the-kindle-market-is-too-small-for-iphone-developers-2010-1#ixzz0rngh2kBD Michael Arrington, 2008. Amazon May Sell $750 Million In Kindles by 2010 Retrieved June 23, 2010 from: http://techcrunch.com/2008/05/14/amazon-may-sell-750-million-in-kindles-by-2010-thats-a-lot-of-kindles/ RTT, 2010 . Amazon Slashes Kindle Price To $189 In E-reader Price War Retrieved June 23, 2010 from...
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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 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 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 Equilibrating Process ECO561 March 17, 2011 Dr. Anyalezu Market Equilibrating Process In determining the number of goods or services demanded by the consumer and the goods or services supplied, business owners will be able to pen point the market price of his or her own products. Therefore, the understanding of supply and demand is important before deciding the equilibrium. With the quantity demanded and supplied as equal, the sales price is known as the equilibrium price (McConnell, 2009). When looking at equilibrium quantity there are two parts that have to be taken into consideration in a competitive market; quantity demanded and quantity supplied (McConnell, 2009). Combining the two will yield the market equilibrating process in a specific market and balance the supply and demand. For instance with release of Play Station 3, Sony was the monopoly and could sell their product at any price as wanted. That year, the XBOX 360 and Nintendo Wii released with the ability of virtual reality and exceptional graphics that forced Sony to develop another strategy. Play Stations were not selling and the market equilibrating process began to show its affects. Sony had more supply than demand and eventually had to drop their price to stay competitive. In addition, the price of a product and household income plays a major determinant that can affect the equilibrium price (McConnell, 2009). From personal experience, waiting until the...
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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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...Market Equilibrating Process Crystal Fairman ECO 561 October 15, 2012 Dr. George Sharghi Market Equilibrating Process Market equilibrium is occurs when the supply and demand of an item is exactly equal. There is not a shortage or surplus in the market and the price remains consistent. When there are shortages the cost of goods increase and cost of goods down but to find the balance in the process is market equilibrium. Understanding the concept of supply and demand will benefit greatly a business or household ability to improve their profits. Demand is a schedule or a curve that shows the various amounts 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. Demand shows the quantities of a product that will be purchased at various possible prices; other things equal (pg46; McConnell, Flynn 2009). Demand is a declaration of a consumer’s plan or intention to purchase the product. A distinctive case of demand is as the price decreases, the quantity demanded climbs as the price rises and the quantity wanted declines. In an inverse relationship the relationship between the price and quantity demanded in the law of demand. An example of the law of demand would be Bauer Hockey Skates. During the hockey months the cost of a pair of skates are approximately $300 but as spring starts to approach the price goes down and consumers are willing to take a chance...
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...1) The price and quantity of Easter eggs is established by bringing the concepts of both supply and demand together to see how the households differentiate in buying decisions and the selling of Easter eggs to achieve market equilibrium. Market equilibrium is the price at which the quantity supplied equals to the quantity demanded. In the hypothetical market model below, the equilibrium price meets at $3 and the quantity is 7,000 Easter eggs of the demand and supply curves. S4 S4 S2 S2 Copyright 2007 McGraw-Hill Australia Pty Ltd, PTs t/a Microeconomics 8e, by Jackson & McIver, By Muni Perumal, University of Canberra, Australia At equilibrium or market-clearing price, the position in which the market is cleared originates from the equilibrating process; there is neither a surplus nor is there a shortage in Easter eggs. At the current price at $3 and demand at 7,000, neither buyers (households) nor sellers can do business at a better price, as consumers pay the highest price they are willing to pay for the last unit bought, and producers receive the lowest price at which they are willing to supply the last unit sold. If supply decreased to S2 in the market model, at this point, the quantity of Easter eggs supplied is 4,000 eggs and the price would decrease to $2 each. As the price has decreased, consumers would want to purchase more at this price, which creates a change in quantity demanded but producers will not produce more eggs at this...
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