Market Equilibrium Process
Introduction
The buyers as well as sellers competition initiates the equilibrating process. Hence without the buyer seller competition, the equilibrium process cannot be triggered. In this text, I discuss the market equilibrating process and its real life occurrence.
The market equilibrating process
Sometimes, goods are in short supply and buyers bid against one another in relation to the price. This in effect drives up the price of the good triggering a fall in demand at some point. As a result of the initial increase in price, supply increases in accordance with the law of supply. Ideally, this process will continue until the quantity demanded is equal to the quantity supplied and the price suppliers want to supply the good at equals the price the buyers want to purchase the good at (McConnell et al. 2009).Last year, as a result of the global economic meltdown, firms with excess stock resorted to underselling their competitors in order for them to reduce their stocks. Months earlier I had been discouraged from buying a mobile handset by the high prices they were going for. This time round, as a result of the underselling in the market, demand rose but in a rejoinder a particular model of a mobile handset I was looking for was unavailable in most outlets. I came to realize that this was a response by the supply side to the falling prices hence a fall in supply. This process continued for sometime until the handsets and in particular the one I wanted was available in the market at a price I as the consumer was comfortable with.
Conclusion
It is hence good to note that after short-term disturbances in the market it eventually returns to equilibrium.
References
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies, 18th Edition. New York: McGraw Hill
Introduction
The buyers as well as sellers competition initiates the equilibrating process. Hence without the buyer seller competition, the equilibrium process cannot be triggered. In this text, I discuss the market equilibrating process and its real life occurrence.
The market equilibrating process
Sometimes, goods are in short supply and buyers bid against one another in relation to the price. This in effect drives up the price of the good triggering a fall in demand at some point. As a result of the initial increase in price, supply increases in accordance with the law of supply. Ideally, this process will continue until the quantity demanded is equal to the quantity supplied and the price suppliers want to supply the good at equals the price the buyers want to purchase the good at (McConnell et al. 2009).Last year, as a result of the global economic meltdown, firms with excess stock resorted to underselling their competitors in order for them to reduce their stocks. Months earlier I had been discouraged from buying a mobile handset by the high prices they were going for. This time round, as a result of the underselling in the market, demand rose but in a rejoinder a particular model of a mobile handset I was looking for was unavailable in most outlets. I came to realize that this was a response by the supply side to the falling prices hence a fall in supply. This process continued for sometime until the handsets and in particular the one I wanted was available in the market at a price I as the consumer was comfortable with.
Conclusion
It is hence good to note that after short-term disturbances in the market it eventually returns to equilibrium.
References
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies, 18th Edition. New York: McGraw Hill
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