...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 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...
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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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...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 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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...Week Two_ Market Equilibration Process Paper Bobby Taylor Economics 561 April 25, 2013 Aleksandr Kocharyan, PhD, instructor Market Equilibration Process Paper The following content items are expected to be developed: • The paper/presentation includes specifics about Law of Demand and lists main determinants of demand, Law of Supply and lists main determinants of supply. The basic determinants of demand are (1) consumers’ tastes (preferences)- a change that makes the product more desirable—means that more of it will be demanded at each price. Demand will increase; the demand curve will shift rightward. An unfavorable change in consumer preferences will decrease demand, shifting the demand curve to the left., (2) the number of buyers in the market,- An increase in the number of buyers in a market is likely to increase product demand; a decrease in the number of buyers will probably decrease demand. (3) consumers’ incomes,- For most products, a rise in income causes an increase in demand. (4) the prices of related goods,- A change in the price of a related good may either increase or decrease the demand for a product, depending on whether the related good is a substitute or a complement: and (5) consumer expectations- Changes in consumer expectations may shift demand. A newly formed expectation of higher future prices may cause consumers to buy now in order to “beat” the anticipated price rises, thus increasing current...
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...Market Equilibration Process Paper ECO/561 April 20, 2015 Market Equilibration Process Paper Economics studies supply and demand and what effects they have on everyday business. Supply and demand work together to paint a picture of market conditions for the business. Their cause and effects are called determinants. As determinants affect one it will also affect the other. To balance the cause and effects is to reach equilibrium. Searching for market equilibrium is essential because when a business does not have equilibrium we experience such issues as surplus or a shortage. This paper will explore the laws of supply, demand and their determinants and the quest for market equalization is it pertains to the business world. Demand is the downward sloping line and we must consider what happens as we move up and down the curve and what causes these changes, also known as determinants. For example, the demand for Internet service has been increasing steadily over the last few years. See below, the graph displays that as the quantity of demand shifts down the price moves in earnest down the slope. Some basic determinants that cause changes to the demand involve consumer preferences, number of buyers, consumer income, prices of related goods, and consumer expectations.(McConnell, Brue, & Flynn, 2009) As we think about demand we must also consider the two types. There is a change in demand and a change in quantity demanded. The change in demand will shift our line...
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...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...
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...Marketing Equilibrium Process Tracey Wilson ECO/561 January 14, 2013 Paul Palley Marketing Equilibrium Process The market equilibrium process is the manufactures ability to maintain a balance between supply and demand. The manufactures has strategically taken into consideration during their planning process how to maximize profits while maintaining the units needed to meet the cost that the consumer will pay above an item at a specific moment in time. In layman term, the market equilibrium process clarifies what happens when the consumers and sellers make decisions in a proficient market (McConnell, Brue, & Flynn, 2009). Therefore, it is important to understand economics, which is the study of scarce resources as it relates to human wants and how this process relates to making choices. The purpose of this paper is to describe the market equilibrium process as it relates to five basic economic concepts. The primary problem of economics entails that individuals must make choices among completing alternatives. Scarcity can never be eliminated, one must choose. “Scarce economic resources mean limited goods and services. Scarcity restricts options and demands choices” (McConnell, Brue, & Flynn, 2009). In life one must make choices, such as an individual’s decision to study an extra hour rather than going to dinner with a friend; therefore, the marginal benefit of studying exceeds its marginal cost. This is also a prime example of opportunity cost. Opportunity...
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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 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 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...
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...Monopolistic competition: An evolutionary approach EXECUTIVE SUMMARY This term paper shows that a monopolistically competitive equilibrium can evolve without purposive profit maximization. Firms exit the industry if they fail to pass the survival test of making nonnegative wealth. Industry converges in probability to the monopolistically competitive equilibrium as the size of each firm becomes small relative to the market, as the entry cost becomes sufficiently small, and as time gets sufficiently large. Consequently, in the limit, the only surviving firms are those producing at the tangency of the demand curve to the average cost curve and no potential entrant can make a positive profit by entry. Introduction The criterion by which the economic system selects survivors: those who realize profits are the survivors; those who suffer losses disappear. In the late 1920s and early 1930s it became apparent that there were severe limitations in conducting economic analysis using a framework of either pure competition or pure monopoly. Consequently, economists began shifting their attention to middle ground between monopoly and perfect competition. One of the most notable achievements was Chamberlin’s, 1933 blending of elements of perfect competition and pure monopoly in a notion of ‘‘large group’’ monopolistic competition where there are many competing firms producing similar but different commodities which are not perfect substitutes. Because of the product...
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...Market Equilibration Process Market Equilibration Process It is important for business managers to understand how market equilibrium is maintained. It is essential for mangers to know how to apply economic principles, specifically supply and demand, to everyday business decisions. In this paper I will describe several economic concepts, such as market equilibrium, supply and demand, and apply their relationship to a real world event. Market Equilibrium Market equilibrium is a very important concept in the study of economics. “Market equilibrium is a market state where the supply in the market is equal to the demand in the market (“Market Equilibrium in Economics,” 2015).” Often times the market is not in equilibrium, meaning that the quantity supplied does not equal the quantity demanded from consumers. When this occurs it creates shortages or a surplus of goods. A surplus happens when there is excess supply or the quantity supplied is greater than the quantity demanded. A shortage occurs when there is excess demand or the quantity demanded is greater than the quantity supplied (“Market Surpluses & Market Shortages,” 2006). Ultimately, the concept is derived from the laws of supply and demand, which will be discussed in the following paragraphs. Supply “Supply is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period” (McConnell...
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...Market Equilibrium Process Glenda M. Manayon University of Phoenix ECO 561 2 October 2012 Al Gourrier, MBA Market Equilibrium Process In a free market economy producers maximize profit by satisfying consumers demands while commodities that are available are determined by the budget constraints of its consumers. Market equilibrium is a significant part of a business’ success. The market determines equilibrium prices leaving business managers the task of determining business decisions while factoring in the law of supply and demand, and its economic principles for the financial success of the organization. This paper will discuss the following four concepts that are important in market equilibrium namely the law of supply, the law of demand, efficient markets theory, and supply and shortage using a conceptual “energy shot” product. One shot energy is an energy “shot” product that was recently launched by “X-energy Company” which has reached top sales because of it’s innovative way of boosting energy in a matter of seconds upon the consumption of a single shot. Energy products are not regulated by the FDA and therefore its effectiveness or side effects can only be tested and vouched for by consumers. One shot energy is sold at $3.00 in a 1.5 ounce bottle. The theory of market equilibrium states that there is a market balance when there is agreement in price and quanitity, unless an outside force disrupts the balance. One shot energy is...
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