...Market Equilibration Process Paper Economics ECO/561 March 18, 2015 Market Equilibration Process Paper In this paper I will describe the “Market Equilibration Process” which identifies the basic condition in which all of these economic forces are balanced. There are many variables that enable these forces to find this equilibration; the primary driver is supply and demand. The law of demand is when your customers purchase more of the goods as the price decreases and less as the price goes up. This is driven primarily through social trends, followed by price and personal choice. The law of supply is what is currently available to market, many producers will increase supply as demands increases. The efficient markets theory basically states that it is impossible to beat the market, as it is always within the means of all relevant information. All of these theories begin with surplus and shortage which occurs in all markets with all market goods. When there is a surplus the price comes down and opposite when there is a shortage the price will increase. In essence what the “Market Equilibration Process” theory suggests is that any product or service trends toward what the market is willing to pay based on demand and supply. I will apply this theory in home values and availability, because of high demand real estate has seen an increase in the price of most homes for sale especially when supply is low. In many communities throughout the State of California families have been...
Words: 353 - Pages: 2
...Market Equilibration Process Paper The economic concepts that influence global business can be applicable even to everyday life. For business managers is essential to be aware of laws of demand, supply, and equilibrium to grow their business. Examples of the mentioned laws are abundant in the daily ground, and by recognizing and exploring them people can learn by observations. The author will discuss the market equilibration process based on example that everyone can relate to – food. Law of demand Demand is how much consumers are willing to pay for a good or service in particular period. The demand relationship is showing the interdependence between quantity and price. For instance, if the cost for exotic fruits is relatively low, consumers will be willing to purchase more kilograms. On the contrary, side if fruits that are imported in the country are expensive, the buyers are likely to buy just a few as for the remaining sum they will fill in their basket with local fruits. The inverse relationship between demanded quantity and price is defined by McConnell, Brue, and Flynn (2009) as law of demand; it is shown on graph 1. Graph 1. Relationship between demanded quantity and price Law of supply Supply is how much of a good or service the market can offer for a certain cost. The law of supply is the relationship between price and quantity supplied. The graph representing the law of demand has a downward slope. Opposed to it, graph 2 that shows the interdependency...
Words: 775 - Pages: 4
...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 ...
Words: 523 - Pages: 3
...Forms of Business Tiffany S. Eubanks LAW 531 November 27, 2011 Jonathon Jamison Forms of Business There are seven types of businesses considered for week two and each display a different way of running a corporation. The seven types are: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Each have their own perks and could be a preferred way of owning a company. When starting a company, one could look at these options and select what opportunity could be best for them. Sole proprietorship- This type of business cost less to begin because most the legal steps are shortened because of one acquiring a sole owner running the business. This type has a single owner making the decisions and receiving profit from the uprising company. One could find this type of business in smaller communities because it is so easy to start up. The term “mom and pop” store would come to mind when thinking of a solo proprietorship. Partnership- this is very similar to a sole proprietorship, but it consists of more than one owner. One would go into business with a person in the agreement between the two, There is no extra bookkeeping needed when having a partnership, and they are not considered employees of the business. Both receive the profit made of the company. This is great because one would have another to share the responsibility’s with when starting and running a company. An example...
Words: 697 - Pages: 3
...Market equilibrium is the point in which industry offers goods at the price consumers will consume without creating a shortage or a surplus of goods. Shortages drive up the cost of goods while surpluses drive the cost of goods down, finding the balance in the process is market equilibrium. In today’s economic environment there are varying array of contributors affecting market equilibrium. Some of these contributing factors are the ever changing technology, changes in supplies, and the change in consumer preferences. Any shift in these factors will affect the economic market, which will cause changes in various areas, thus resulting in significant shift in market equilibrium (McConnell, Brue, & Flynn, 2009). Reaching market equilibrium means being able to satisfy both the buyers and sellers, and on a graph, it reflect the intersection of demand and supply. Keeping the consumer satisfied in the long-term is a challenge. In the current economic environment, businesses are ensuring the resources are used proficiently and successfully, this is done through periodic assessments to ensure the company can benefit from the consumers and their changing preferences. This process would generate a precise pattern of the customer’s choices such as taste, technological alternatives, and amount of available resources, which would become outdated and ineffective (McConnell et al., 2009). My experience with the market equilibrating process is easily found in my personal financial debts and...
Words: 501 - Pages: 3
...would help improve sales and had no luck. We then started looking at our competitors and realized that not only were they having more success that us, but their prices were much lower and it was then when we realized that lowering the prices could be a solution. My partner and I decided to play with the numbers a little. During holidays, we offered 75% discounts so customers could buy a pair for $10. The first trial was close to Christmas and within two weeks all shades were sold so we then realized that if we were to continue these holiday sales, we would experience shortage or have less supply than what is demanded. An economic shortage is a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus. In order to reach our equilibrium point or the point where our supply met the demands for our particular shades, we went back to our $40 price and then brought the price down by $4 every month. By the 4th month, prices were dropped to $24 per...
Words: 546 - Pages: 3
...Market Equilibration Process Paper Your Name ECO/561 June 9, 2014 Instructor Name Market Equilibration Process Paper Many beef lovers will feel the impact of high beef prices this year, as they prepare for the busy grilling season. The United States cattle ranchers reported 2014 to be the worst cattle shortage in more than 61 years. The shortage is due to the severe drought conditions stretching over much of the southwest United States. In addition to the drought conditions, the historically low temperatures also contributed to the shortage as the cattle were not able to gain weight. The lack of weight gain prevented the cattle from going to the meat processors. Even through the drought, some cattle ranchers experienced large amounts of snow pack, which made transporting herds to the processors impossible. McConnell, Brue and Flynn (2009) define the Law of Demand as, “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.” (p.47) Additionally, McConnell, Brue and Flynn (2009) define the Law of Supply as, “As price rises, the quantity supplied rises; as price falls, the quantity supplied falls. This relationship is called the law of supply.” (p.51) In relationship to the cattle shortage, the laws of supply and demand...
Words: 451 - Pages: 2
...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...
Words: 750 - Pages: 3
...Market Equilibration Process Paper Adekola Ayantola ECO/561 November19, 2012 Market Equilibration Process Paper Market equilibration process in economics is the ability put the supply function and demand function together to obtain market equilibrium. The Demand and supply principle find the price and the output of the item in question. In a situation in which the supply quantity is fixed and assigned the evaluated function of the demand at that particular price will determine the supply price. 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, and this will enable the producers and purchasers to be on the same par on price and products. 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. 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...
Words: 486 - Pages: 2
...Market Equilibration Process To conduct any business in the market there are two sides supply and demand that needs to interact with each other. The market equilibration process is the process where suppliers supply product to the exact quantity demanded and there is no excess product. This results in efficient market to conduct business. This paper describes how housing prices in market is affected by changes in supply and demand so that we can have better understanding of equilibration process. The main concept in economics are supply and demand in a market to conduct business. Law of demands states that for any goods or service as the price falls, the quantity demanded rises and also when price rises, the quantity demanded falls (McConnell, Brue, & Flynn, 2009). The relationship between price and quantity is negative and downward sloping curve as seen in Figure (b) in Appendix A. Price is one of the main factor related to quantity demanded but there are also other factors known as determinates of demand such as buys preference, number of buyers, incomes of buyers and prices of related goods (McConnell, Brue, & Flynn, 2009). Law of supply states quantity supplied rises as price rises and as quantity supplied decreases price also decreases (McConnell, Brue, & Flynn, 2009). Quantity and price are directly related to each other therefore creates upward sloping curve as seen in figure (c) in Appendix A. Like demand, the efficiency of supply are determined by factors such as...
Words: 619 - Pages: 3
...Market Equilibration Process Paper ECO/561 June 7, 2012 Dr. Jill Trask Market Equilibration Process Paper Market equilibration can be accomplished when market price established through competition so the amount of good bought is equal to the number of goods sold. Supply and demand would be factors to change the market equilibrium. In the oil industry market equilibrium is determined by the cost of oil, competitor’s prices, and technology. “As a price falls, the quantity demand rises, and as a price rises, the quantity demanded falls” (McConnell, Brue, & Flynn, 2009, p. 47). Consumers travel constantly to go to work, school, or vacation. This travel requires the use of some form of transportation whether it is train, airplane, or automobile. The transportation modes use a form of fuel to move the vehicles. Certain periods increase the demand for fuel or decrease the demand, for example holiday weekends would increase the demand. When the price of fuel increases a traveler will see an increase in an airline ticket or a train ticket. If the prices for the airline or train ticket are too much the traveler may choose to drive instead to keep their cost down, When the fuels prices rises so does the commuter train tickets, causing some commuters to find alternate ways to work, such as carpooling. As the fuel prices decrease so do transportation costs allowing individuals to travel more often in their choice of transportations rather than the economical choice. As...
Words: 575 - Pages: 3
...handle on the total cost associated with operating a business. In business economics, cost and knowing the effecting controllers, allows managers to adjust accordingly. Businesses overall, need to know where money is going, when and where they need to cut expenses, and when they need to produce more to offset the cost. As the demand for a product or service increase, the company would need to understand when it should increase its supply for that product or service. It seems simple, but there is much more that goes into increasing supply to meet demand; such as a change to the company’s variable cost and transferring the cost to consumers. 2- Market Equilibration Process To conduct any business in the market there are two sides supply and demand that needs to interact with each other. The market equilibration process is the process where suppliers supply product to the exact quantity demanded and there is no excess...
Words: 532 - Pages: 3
...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...
Words: 439 - Pages: 2
...Market Equilibration Process Paper The purpose of the assignment is to comprehend the process of market equilibrium and its conservation. Team D will be discussing the factors and the law determining the demand and supply and the Market theory, surplus and shortages. I shall use the Housing Market of Cupertino, California and also have attached an Appendix A which illustrates the graphs that show when the supply got equalized with demand, when the demand increased but the supply was same and no change in demand but decrease in supply. Law of Demand and its determinants The law of demand in simple words tells that consumer is going to make more purchases of a product when its price is decreased and fewer purchases when the price rises. The factors which determine this are the rates of related goods, income, own taste, wealthiness, what consumer expects from the product and the conditions of the business. Cupertino, California is such an area that has been searched for many times as it is in the center of the Silicon Valley; it has a nice placement and is also one of the best school district. So, demand for the houses in the area is constantly high. Law of Supply and its determinants Law of supply of goods is concerned to quantity offered for sale in a specific market at specific time at numerous pricings (Thomas). The factors determining it include resource price, technology used in production, other costs, expectations of a seller and number of people selling. In Cupertino...
Words: 574 - Pages: 3
...Market Equilibration Process Paper Marlene Toadlena ECO 561 March 02, 2015 Genevieve Turano Market Equilibration Process Paper During Hurricane Sandy, the city of New York experienced price gouging by merchants due to the increase in demand for many products. The supply is limited; therefore, many merchants decided they would be able to capitalize on the needs of the consumers. However, during the storm, public transportation was limited, and the buses weren't running due to the cost of fuel, trains, and the subways were at a standstill due to the flooding. Uber, a car service company, came into the picture for transportation. This paper will show how the demand and supply of transport services were affected by Hurricane Sandy, during a time of disaster, and how the consumers reacted to the changes in prices. The Law of Supply and Demand Maddalena (2012) states, “It is all a matter of supply and demand and what happens when one or both are disrupted from their normal point. When a market is functioning normally supply and demand intersect at a point (called the equilibrium point) which bases the best price that the market is willing to pay as well as the best quantity that the market will provide. When a market is disrupted due to some external event, supply and demand can change causing a new equilibrium point and a new price and quantity” (Maddalena, 2012). With the events taking place during Hurricane Sandy, the Uber transportation company took advantage of the consumers...
Words: 813 - Pages: 4
