Market Equilibrating Process Paper

Topics: Supply and demand, Marketing, Austrian School Pages: 2 (421 words) Published: July 3, 2010
Market Equilibrating Process Paper

Yadhira Santiago

ECO 561/Economics

Jack Karczewski

April 18, 2010

Market Equilibrating Process

Finding equilibrium in the market is the same as finding equilibrium in our daily lives. Before you can find equilibrium it is important to understand the demand and supply of a product. Natural disasters or man made disasters can lead to increase the necessity of a product. As of this moment Wendy’s restaurants are having some difficulties obtaining tomatoes. Since the bad weather a couple months ago, the tomatoes crops were damaged and now the tomatoes supplies are running low and they can not produce enough to cover the actual demand for tomatoes.

Due to this shortage on supply the price on tomatoes have being increasing. Because of this price increase Wendy’s fast food restaurants have decided to stop offering this produce on their burgers until further notice. Equilibrium price the common ground for a buyer and a seller. Same scenario happened with strawberries, because of the bad weather the farmer’s crops were damaged and they will force to increase the price on strawberries. It was noticeable at your groceries store the increase on prices. Consumers choose not to pay the high prices meaning that the supply of strawberries will increase and go bad. Sometimes business choose to low the prices before the produce will go bad even if this means that won’t make a lot profit.

If consumers were willing to pay the high prices for these produces the market will become competitive and the business will start making different strategies to allure consumers in their direction. This competition will start bringing the prices of the produces down, but it is important that business understand that they need to set up a line before bringing the price too low and hurting the market permanently. Because some businesses have been careless about this, other businesses have suffered and they have gone...

References: McConnell, Brue, Flynn (2009) – Demand, Supply and Market Equilibrium - Introduction
to Economics and the Economy (Chapter 3)
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