Market Equilibrating Process Paper
This paper will describe the economic concepts of supply, demand, and market equilibrium and discuss their relationship to real world examples. It will then discuss the market equilibrating process and compare that to the same real world example. The first economic concept that I would like to discuss is demand. 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 (McConnell, Flynn 2009). An important characteristic of demand indicates that as price falls, the quantity demanded rises and as the price increases, the quantity demanded falls. The relationship between the price and quantity demanded is called an inverse relationship and this is what Economists call the law of demand. In discussing the law of demand, an example could be the sale of Nike tennis shoes. A major department store retails the shoes for $120 normally, however, during their back-to-school sale, the shoes were reduced by 50% making them only $60. As the price went down, more consumers purchased the shoes. The sale itself is indicative of the stores belief in the law of demand concept. The next economic concept to discuss is 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. As price rises, the quantity supplied rises; as price falls, the quantity supplied falls. This relationship is called the law of supply. A supply schedule tells us that, other things equal, firms will produce and offer for sale more of their product at a high price than at a low price. (McConnell, Flynn 2009). Using the...