...Market Equilibration Process To conduct any business in the market there are two sides supply and demand that needs to interact with each other. The market equilibration process is the process where suppliers supply product to the exact quantity demanded and there is no excess product. This results in efficient market to conduct business. This paper describes how housing prices in market is affected by changes in supply and demand so that we can have better understanding of equilibration process. The main concept in economics are supply and demand in a market to conduct business. Law of demands states that for any goods or service as the price falls, the quantity demanded rises and also when price rises, the quantity demanded falls (McConnell, Brue, & Flynn, 2009). The relationship between price and quantity is negative and downward sloping curve as seen in Figure (b) in Appendix A. Price is one of the main factor related to quantity demanded but there are also other factors known as determinates of demand such as buys preference, number of buyers, incomes of buyers and prices of related goods (McConnell, Brue, & Flynn, 2009). Law of supply states quantity supplied rises as price rises and as quantity supplied decreases price also decreases (McConnell, Brue, & Flynn, 2009). Quantity and price are directly related to each other therefore creates upward sloping curve as seen in figure (c) in Appendix A. Like demand, the efficiency of supply are determined by factors such as...
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...Market Equilibration Process Vonda Herrin ECO/561 October 8, 2013 Emmanuel Welbeck Market Equilibration Process Having equilibrium in the market is the same as having equilibrium in our daily activities. Economic equilibrium is “a condition or state in which economic forces are balanced. It can also be defined “as the point where supply equals demand for a product – the equilibrium price is where the hypothetical supply and demand curves intersect” (Investopedia, 2013). It is important to understand supply and demand of a product in order to find equilibrium. In today’s market, consumers are usually weary about purchases of large items due to the fact there are many competitors competing for the same potential customers. Could you live without the internet, cell phone, microwave, television, or any other electric technologies? Law of Demand and Supply The world today have grown to rely heavily on technology, especially the cellular phones, in their daily activities. “The average U.S. household today owns at least 23 consumer electronic products” (Get Energy Active, 2011). As the technology in cell phones changes, consumers are eager to purchase the latest styles whether for practical uses or to be consider part of the “in crowd”. Suppliers uses this information in researching and to appropriately distribute the products and services by applying the laws of demand and supply. The law of demand is when “supply is held constant, an increase in demand leads to...
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...Market Equilibration Process Terry Martin ECO/561 April 22, 2014 Eric Hogan Market Equilibration Process Supply and demand is considered one of the most important factors of economics. According to www.ingimayne.com, supply and demand set the price and the amount of a good that will be produced. For instance, if the demand is high the price will less, but when the price is high the demand the demand will be less. In addition, demand is the quantity of a product or service desired by the buyer and supply is how much the market can actually offer. This is also called the supply relationship. In my paper I will explain how the coffee prices rose in 2011 due to the increase demand and reduced coffee supply. In 2010, coffee prices increased more than fifty percent causing the price of coffee to rise tremendously. The short supply of Arabic coffee bean varietals are used for many gourmet coffee, premium coffee, and specialty coffee. They are used by Starbuck’s, Community Coffee, and other major coffee roasters and retailers. With the increase in professionals the demand for premium coffee has increased as well. In Brazil, India, and China this trend is particularly noticeable, placing a huge demand on coffee beans. Starbucks controls about seventy percent of China’s market share in the coffee industry. However, green coffee beans decreased and the higher cost of coffee worked its way to grocery shelves and in coffee houses and cafes across the country as well as the United...
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...Demand and Supply for DVD rental Fernando Miller ECO/561 4 November 2014 Saeed Tabriz Demand and Supply for DVD rental Introduction Purpose/Objective Background: The purpose of this paper is to provide real world experience using DVD rental market as well as to conduct analysis with examples of Demand and Supply. Element to consider in this paper are the laws of demand and supply and determinant factors; economic efficient markets and surplus and shortage. Market Conditions: DVD rental are slowly becoming outdated as demand for this product dwindles. Attributing factors broad about a shift in the supply and demand conditions may be attributed by new technological developments (supply) that has introduce other mediums (demand preference) of providing this type of entertainment service. Demand for this type of product is currently fulfilled by businesses such as Amazon, Netflix and Redbox who currently host the biggest market share for this type of product. Law of demand and determinants: McConnell (2009) defines the Law of Demand as “Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls.” This law establishes an inverse relationship between price and quantity demanded (McConnell 2009). Determinants of demand are consumer factors that shift the demand curve factors such as income (increases and decrease), preferences (consumer choices), and number of buyers (increase or decrease). Price...
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...Market Equilibration Process ECO/561 January 27, 2014 Warren Matthews Market Equilibration Process In economics, supply and demand is one of the most essential concepts and the foundation of the market economy. Consumers demand a product, and producers in the market supply the product to the best of their ability. When shifts in the equilibrium between supply and demand occur, the players in the market (sometimes unknowingly) work together to balance the two. When exploring the market equilibration process surrounding propane gas, it is evident that the abnormally frigid temperatures throughout the Midwest and Northeast, in combination with the long wet fall, are creating an unbalance. The Law of Demand The law of demand according to McConnell, et al (2009) states, “…Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls,” (p. 47, para. 3). However, looking more closely at the case involving propane will prove the importance of understanding the phrase "all things equal". Some factors influence the law of demand. Those factors include (1) consumer preferences, (2) the number of active buyers, (3) consumers’ incomes, (4) the prices of related goods, and (5) consumer expectations,” (McConnell, Brue, & Flynn, 2009, p. 48, para. 4). Focusing on the number of active buyers in the market in combination with consumer expectations allows one to see how these factors increase the demand of propane. One can reasonably...
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...Clifford Thompson ECO/561 September 9, 2014 Dr. Virgil Mensah-Dartey When an organization is mention, the one of the first thing that comes to mind is the collective economic concepts of supply, demand determinants and market equilibrium in the marketplace. While this is true, one needs to consider the relationship between the buyer and the seller in the market. This paper will specifically examine the roles market equilibrium and how it compares to a consumer purchasing surrounding supply and demand of a product quantity (Kimmons, 2014). Law of Demand According to McConnell, market equilibrium is determined when establishing supply demand of product quantity and services. As a result, the equilibrium processes provide confidence for the buyer and the seller. One economic concept is demand. The demand curve that shows the estimated quantities amount the consumer is willing and able to pay for a product during at a specific price or during a specified period (McConnell, Flynn 2009). Demand is an important factor that shapes the behavior of the customer. A fundamental demand theory is when prices fall on an item the demand quantity increases. The law of demand is the relationship between the price of an item and the quantity demanded. An example could be the sale of television sales before the super bowl. Most department stores retail high definition televisions for $1100 normally; however, during the upcoming super bowl week, the televisions were reduced by 20...
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...Market Equilibration Process Paper The economic concepts that influence global business can be applicable even to everyday life. For business managers is essential to be aware of laws of demand, supply, and equilibrium to grow their business. Examples of the mentioned laws are abundant in the daily ground, and by recognizing and exploring them people can learn by observations. The author will discuss the market equilibration process based on example that everyone can relate to – food. Law of demand Demand is how much consumers are willing to pay for a good or service in particular period. The demand relationship is showing the interdependence between quantity and price. For instance, if the cost for exotic fruits is relatively low, consumers will be willing to purchase more kilograms. On the contrary, side if fruits that are imported in the country are expensive, the buyers are likely to buy just a few as for the remaining sum they will fill in their basket with local fruits. The inverse relationship between demanded quantity and price is defined by McConnell, Brue, and Flynn (2009) as law of demand; it is shown on graph 1. Graph 1. Relationship between demanded quantity and price Law of supply Supply is how much of a good or service the market can offer for a certain cost. The law of supply is the relationship between price and quantity supplied. The graph representing the law of demand has a downward slope. Opposed to it, graph 2 that shows the interdependency...
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...Market Equilibration Process Paper Economics ECO/561 March 18, 2015 Market Equilibration Process Paper In this paper I will describe the “Market Equilibration Process” which identifies the basic condition in which all of these economic forces are balanced. There are many variables that enable these forces to find this equilibration; the primary driver is supply and demand. The law of demand is when your customers purchase more of the goods as the price decreases and less as the price goes up. This is driven primarily through social trends, followed by price and personal choice. The law of supply is what is currently available to market, many producers will increase supply as demands increases. The efficient markets theory basically states that it is impossible to beat the market, as it is always within the means of all relevant information. All of these theories begin with surplus and shortage which occurs in all markets with all market goods. When there is a surplus the price comes down and opposite when there is a shortage the price will increase. In essence what the “Market Equilibration Process” theory suggests is that any product or service trends toward what the market is willing to pay based on demand and supply. I will apply this theory in home values and availability, because of high demand real estate has seen an increase in the price of most homes for sale especially when supply is low. In many communities throughout the State of California families have been...
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...Market Equilibration Process Paper The market equilibration provides opportunity for business organization to adapt to various changes that happens in the market in their field. To guide the management in adjusting to the demands by adjusting the supply to create market equilibrium. This will enable the producers and purchasers to be on the same par on price and products. Law of Demand For equilibrium to exist there must be a demand of the product or products or services. There must be willing buyers with available resources to purchase the products or services at the agreed price. Once the need has been established, the products can be produced or developed. Law of Supply The product is supplied to the market at the price the consumer is willing to pay, and this thus creates market equilibrium. In a situation in which there is an imbalance in one side, the equilibrium is affected, and there is a shift more to once side. In a situation of this nature there may be a shortage of supply and may cause price increase that may result in competitors coming in to fill the vacuum. The other possibilities are to have excess supply in the market, and this will drop the price of commodity that may cause a big drop in price and will create an imbalance in the equilibrium in the market. Efficient market Theory The efficiency of this theory depends on how effective the market supply respond to the demand and how the consumers perceived and received the products. Surplus and Shortage ...
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...Market Equilibration Process Paper David Campbell ECO/ 561 May 6, 2013 Professor Maria H. Ramjerdi Market Equilibration Process Paper There are many things that come with learning the concepts of supply and demand. It for one helps many people who are corporation owners have to the capability to make best of their income. The Market Equilibrating Process to us all is “the interaction of market demand and market supply adjusts the price to the point at which the quantities demanded and supplied are equal”, known as equilibrium price. Also known is that equilibrium quantity relates to corresponding quantity. A change in either demand or supply changes the equilibrium price and quantity (McConnell, Brue, & Flynn, 2009). Throughout this paper I will not only speak on market equilibrating process but also give my experience. The market equilibrating process is experienced many times through people’s lives but for me I see most examples through my finances. If looking at a supply curve, you would see my earnings and revenue. My amount outstanding and disbursements would be look at as my demand curve. The moment when my income reaches the same amount as my debts then that is known to be my equilibrium point. The equilibrium point is where I see the amount I am able to pay for with my balance due and income. Throughout understanding this concept I have noticed that there are many different things that can affect the curve for supply and demand. One thing that damages...
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...Forms of Business Tiffany S. Eubanks LAW 531 November 27, 2011 Jonathon Jamison Forms of Business There are seven types of businesses considered for week two and each display a different way of running a corporation. The seven types are: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Each have their own perks and could be a preferred way of owning a company. When starting a company, one could look at these options and select what opportunity could be best for them. Sole proprietorship- This type of business cost less to begin because most the legal steps are shortened because of one acquiring a sole owner running the business. This type has a single owner making the decisions and receiving profit from the uprising company. One could find this type of business in smaller communities because it is so easy to start up. The term “mom and pop” store would come to mind when thinking of a solo proprietorship. Partnership- this is very similar to a sole proprietorship, but it consists of more than one owner. One would go into business with a person in the agreement between the two, There is no extra bookkeeping needed when having a partnership, and they are not considered employees of the business. Both receive the profit made of the company. This is great because one would have another to share the responsibility’s with when starting and running a company. An example...
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...Market equilibrium is the point in which industry offers goods at the price consumers will consume without creating a shortage or a surplus of goods. Shortages drive up the cost of goods while surpluses drive the cost of goods down, finding the balance in the process is market equilibrium. In today’s economic environment there are varying array of contributors affecting market equilibrium. Some of these contributing factors are the ever changing technology, changes in supplies, and the change in consumer preferences. Any shift in these factors will affect the economic market, which will cause changes in various areas, thus resulting in significant shift in market equilibrium (McConnell, Brue, & Flynn, 2009). Reaching market equilibrium means being able to satisfy both the buyers and sellers, and on a graph, it reflect the intersection of demand and supply. Keeping the consumer satisfied in the long-term is a challenge. In the current economic environment, businesses are ensuring the resources are used proficiently and successfully, this is done through periodic assessments to ensure the company can benefit from the consumers and their changing preferences. This process would generate a precise pattern of the customer’s choices such as taste, technological alternatives, and amount of available resources, which would become outdated and ineffective (McConnell et al., 2009). My experience with the market equilibrating process is easily found in my personal financial debts and...
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...would help improve sales and had no luck. We then started looking at our competitors and realized that not only were they having more success that us, but their prices were much lower and it was then when we realized that lowering the prices could be a solution. My partner and I decided to play with the numbers a little. During holidays, we offered 75% discounts so customers could buy a pair for $10. The first trial was close to Christmas and within two weeks all shades were sold so we then realized that if we were to continue these holiday sales, we would experience shortage or have less supply than what is demanded. An economic shortage is a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus. In order to reach our equilibrium point or the point where our supply met the demands for our particular shades, we went back to our $40 price and then brought the price down by $4 every month. By the 4th month, prices were dropped to $24 per...
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...Market Equilibration Process Hair care is very lucrative business. Millions of men and women use hair salons as their choice of preference. I personally choose to visit the salon on a weekly basis. Although I choose a weekly visit to the hair salon, most individuals don’t. Hair stylists have chosen a very volatile market because of seasonal changes, state of the economy and competitor pricing. Because there are many individuals like me who care to have services rendered at the hair salon, my hair stylist has a plan in place to obtain market equilibrium. For example, my hair stylist offers discounts to me and other customers during slow season to maintain market equilibrium. One example would be if he or she spends 100 dollars or more on a service, one would have the opportunity to save five dollars on his or her service, thus allowing continue future endeavors with the stylist. The drawback to this discount program occurs when clients are unable to come; the stylist is unable to maintain market equilibrium. To eliminate this my hair stylist has implemented more timeframes as to when these discounts can be redeemed such as Mother’s Day, Christmas, and New Year’s Day. This creates a market for equilibrium, supply, and demand for the owner and her business. This greatly benefits clients such as me; it allows me to disburse money while knowing that I will receive a discount on my hairstyle. I have also referred others to my stylist due to her customer discount program as well...
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...Market Equilibration Process Paper Your Name ECO/561 June 9, 2014 Instructor Name Market Equilibration Process Paper Many beef lovers will feel the impact of high beef prices this year, as they prepare for the busy grilling season. The United States cattle ranchers reported 2014 to be the worst cattle shortage in more than 61 years. The shortage is due to the severe drought conditions stretching over much of the southwest United States. In addition to the drought conditions, the historically low temperatures also contributed to the shortage as the cattle were not able to gain weight. The lack of weight gain prevented the cattle from going to the meat processors. Even through the drought, some cattle ranchers experienced large amounts of snow pack, which made transporting herds to the processors impossible. McConnell, Brue and Flynn (2009) define the Law of Demand as, “A fundamental characteristic of demand is this: Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. In short, there is a negative or inverse relationship between price and quantity demanded. Economists call this inverse relationship the law of demand.” (p.47) Additionally, McConnell, Brue and Flynn (2009) define the Law of Supply as, “As price rises, the quantity supplied rises; as price falls, the quantity supplied falls. This relationship is called the law of supply.” (p.51) In relationship to the cattle shortage, the laws of supply and demand...
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