Market Equilibration Process Paper

Topics: Supply and demand, Economic equilibrium, Partial equilibrium Pages: 3 (625 words) Published: September 2, 2013
Market Equilibration Process
Charlene Snowden
ECO/561
June 10, 2013
Daniel Rowe

Market Equilibration Process Paper
The point where a company may offers goods at a price to consumers without generating a shortage or a surplus of goods in known as market equilibrium. Equilibrium is met with the consideration that the products are demanded by the consumers. The economic principles concepts of supply, demand, and market equilibrium are discuss in relationship with business managers.

According to McConnell, Brue, and Flynn (2009), demand is a curve that displays different quantity of goods that consumers are willing to purchases goods or services at a series of possible prices during a time (McConnell, Brue, & Flynn, 2009). The law of demand states that when prices increase the quantity of demand will decrease (Armadeo, 2013). There are determinants that drive demand. These determinants of demand are (1) price of goods, (2) prices of competitors/related goods, (3) income of consumers, (4) preferences or taste of consumers, (5) the consumers’ expectations, and the number of buyers in the market (Armadeo, 2013).

According to McConnell, Brue, and Flynn (2009), supply is a curve that displays the various amounts of a good that producers are willing to make available to consumers of each good in a series of possible prices during a time (McConnell, Brue, & Flynn, 2009). It is understood that when prices increases, the quantity of supplies increases; as prices decreases the quantity of supplies available will decrease as well. The law of supply states the relationship between the quantity of supplies that increases to the quantity of supplies that decreases. The determinants that influences supply are, (1) resources prices for goods, (2) technology, (3) prices of related goods, (4) taxes and subsidies for goods, (5) producers expectations,...


References: Armadeo, K. (2013). Determinants of Demand The Five Factors Affecting Demand Using Examples in the U.S. Economy. Retrieved from http://useconomy.about.com/od/demand/a/Determinants-of-Demand.htm
Beggs, J. (2013). Supply and Demand Equilirium. Retrieved from http://economics.about.com/od/market-equalibrium/ss/Supply-And-Demand-Equilibrium_3htm
Beggs, J. (2013). The Determinants of Supply. Retrieved from http://economics.about.com/od/supply-and-the-supply-curves/ss/The-Determinants-Of-Supply.htm
Dimson, E., And Mussavian, M., 2000. Market Efficiency. The Current State Of Business Disciplines, 3, 959-970.
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Economics: Principles, problems, and policies (18th ed.). Boston, MA: McGraw-Hill, Irwin.
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