Market Equilibrium Process Analysis

Only available on StudyMode
  • Topic: Supply and demand, Economic equilibrium, Partial equilibrium
  • Pages : 2 (536 words )
  • Download(s) : 418
  • Published : April 2, 2010
Open Document
Text Preview
The main goal of the market equilibrium is to get match the common intention of buyer and seller in the market. According to McConnell, the market equilibrium is the base point in which the supply and demand of the product quantity (McConnell, 2009). The equilibrium process play role for the buyer and seller agreement and confidence in each other. The process of equilibrium has impact of the following facts •Equilibrium price and quantity of products.

Changes and shift in demands of the products.
Changes and shift in supply of the products.
The equilibrium price and quantity also can be referred by the total intersection of supply and demand curve. The shift in this curve will affect the shift in the equilibrium price and quantity. The change in the demand of product also effect the price and quantity structure at equilibrium because if the demand is higher then the price will be higher and the production in quantity will be higher as well. The supply will have impact on the equilibrium level as well because if the product supply in large amount then the price will stay at the low but if the supply level decreases then the price might go up due to the demand of the product. Above all facts about the market equilibrium process can be shown in the experience at the music store while buying music CD. One of the favorite band CD price was $15 until previous week, but at present the price have gone up to $22. The sudden price change was the effect of the demand of the band CD. The change in demand of the CD was higher this week and the supply was only 50 in quantity, which producer thought to be enough for the market demand. But the same CD was requested by more than 50 people, and increase in the demand prompt to increase in the price. Thus the effect of the demand change affected the equilibrium structure of price and quantity. The same effect can be seen in the supply. The supply of the same band CD was 70 and only 50 people have requested about the band...
tracking img