Market Equilibration Process

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  • Topic: Supply and demand, Economic equilibrium, Partial equilibrium
  • Pages : 3 (722 words )
  • Download(s) : 178
  • Published : March 26, 2012
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Market Equilibration Process Paper
Lurene Flynn
ECO/561
January 30, 2012
Kathleen M. P. Byrne – Facilitator

Market Equilibration Process
Understanding how market equilibrium is maintained is essential for business managers. As a manager, it is important to consider how economic principles, and specifically supply and demand, as a part of everyday business decisions. This paper will describe the economic principles concepts of supply, demand, and market equilibrium and discuss their relationship to real world examples.

According to McConnell, Brue and Flynn (2009) demand is a schedule or a curve that shows the various amount of a product that consumers are willing and able to purchase at each of series of possible prices during a specific period of time (McConnell, Brue, & Flynn, 2009, p. 46). The inverse relationship between price and quality demanded is the quantities of a product that will be purchased at various possible prices (McConnell, Brue, & Flynn, 2009). An important concept of demand is when prices fall, the quantity demanded rises and as the price increases, the quantity demanded falls. Determinants of demand are (1) consumers’ tastes (preferences), (2) the number of buyers in the market, (3) consumers’ incomes, (4) the prices of related goods, and (5) consumer expectations they change the shift of the demand curve. * For example to show how the law of demand works we will use the sale of school supplies. A well know superstore retails school supplies such as notebook paper for $2.99 and pencils for $1.29. At their back to school sale their prices for notebook paper drops for $1.00 and for pencils $.29. As the prices went down, more consumers’ purchases school supplies. The superstore is a strong believer in the law of demand concept. Supply is a schedule or curve that shows the various amounts of a product that producer are willing and able to make available for sale at each of a series of possible prices during a specific...
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