Week 2 Market Equilibrium
ECO/561
September 3, 2015

Market Equilibrium Comprehending market equilibrium and the need to preserve market equilibrium is critical for all organizational leaders. Market equilibrium is the position at which the demand of the end user is equivalent to the supply of the manufacturers. The objective of all companies is to guarantee their productivity is at market equilibrium, thus having no excess or deficiency. The data looks very clear; however, by understanding the components and each of the economic roles that is included in reaching equilibrium will support in the understanding of the developments. Factors of market equilibrium take in elements of the law of demand and determinants of the law of supply, as well as, proficient markets theory and market surplus or shortage. The wheel business repeatedly experience variations in demand, price, and supply. The proceeding debates the essentials of the results of a tire company with original equipment (OE) and replacement equipment (RE) wheel producers and adjustments they make to reach market equilibrium.
Supply and Demand
The law of demand describes the reverse or adverse association concerning price and quantity thru expressing when price drops, demand amounts increase and when price climbs, demand quantities decrease (McConnell, Brue, & Flynn, 2009). The demand curve slopes downward to the right as prices fall and demand increases. Between the years of 2008 and 2009, a great economic misfortune produced modifications to customer’s earnings initiating fewer customers to purchase new cars. The shift in the demand for newly manufactured cars had an undesirable consequence to the need for tires from the original equipment manufacturers (OEMs). At the same time, the pricing to OEMs began to decrease as the demand fell. The element of decreases in demand for latest tires