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Amazon Kindle

In: Other Topics

Submitted By MariamIbrahim
Words 553
Pages 3
Market Equilibrating Process
Mariam Ibrahim
ECO/561
June 06, 2011
Tom Hodgkiss

The Amazon kindle was a enormous hit; it is surprising how technology grows fast enough that it comes up with an updated version in the same year. I was interested in how it sold out in five and a half hours the minute Amazon released it for the first time, and I always kept comparing it to the NOOK. This example is perfect to explain the market equilibrium process and how the supply and demand apply. The law of demand is simple, “there is a negative or inverse relationship between price and quantity demanded.”(Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn, 2009, p.47 ), which basically means the when the price rises, the quantity demanded falls or vice versa. The determinants of demand can shift the demand curve and change the demand schedule such as change in buyer’s taste, numbers of buyers, consumer’s income, price-related goods, and consumer expectations.

The law of supply is a positive relationship between price and quantity supplied (Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn, 2009), which is basically means that if the price rises the quantity supplied will rise too. The determinants of supply are a few that can affect the supply curve, such as the resource prices, technology, taxes and subsidies, prices of other goods, producer expectations, and the number of sellers.

This leads me to the market equilibrium, which means that the quantity supplied is equal to the quantity demanded. If there is a low supply in a certain product like the kindle or NOOK and a high demand will lead the price to rise, in contrast the higher the supply, the lower the demand, the lower the price will be. The graph below shows the supply, demand curves, and market equilibrium in relation to the price and quantity.

Price

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