Market Equilibrium Process
In today’s economic culture, there is currently a huge significance in being able to analyze or understand the state of the economy to which we live in. Being that I spend money in today’s market I would like to think that the economic market is stable enough to return back to me in one form or another. One could always tell when a market is at its weakest of points. There are grave numbers of job loss or retention of employees, gas prices continuously rise, financial corruption are more present and recognizable. All of these things play a key role of individuals encountering equilibrium.
Investopedia defines equilibrium as “the state in which market supply and demand balance each other and, as a result, prices become stable” (Investopedia) Recently within the U.S gas prices in some parts of the country went down in pricing to $1.89-$2.24 causing the demand to go up significantly. This situation would have been described as market equilibrium process according to economist or hitting a jackpot to the average working Joe. Hopefully, after reading this paper, there will be a better understanding on how the market equilibration process is applied to one’s everyday life.
Market Process Equilibrium It has been both tested and verified in many financial markets that high prices reduce demand but still encourages suppliers to produce. When there are lower prices the demand increase steadily but turns off the need to further supply. “In a free market there will be a single price which brings demand and supply into balance, called equilibrium price.” (Economics Online) Market process equilibrium and equilibrium price are often referred to as being very similar facets used in an economy for survival. At the equilibrium price the exact quantity that producers take to market are purchased in full by consumers, and there will be nothing ‘left over’. This is very similar to market
References: Works Cited Economics Online. (n.d.). Equilibrium. Retrieved May 17, 2015, from Economics Online: http://www.economicsonline.co.uk/Competitive_markets/Market_equilibrium.html Investopedia. (n.d.). Definition of Equlibrium. Retrieved May 17, 2015, from Investopedia: http://www.investopedia.com/terms/e/equilibrium.asp