Market Equilibrating Process Paper

Market Equilibrating Process Paper

ECO/561

Aug 27, 2010

Donna Kassar

“Market equilibrating process is the method(s) in which manufacturers tend on maintaining a balance between supply and demand reaching equilibrium.

The means/methods these manufacturers have taken into consideration, while planning strategies/techniques/and patterns that would lead to them maximizing profit while unit sold still matches the amount consumers are willing to pay over an item at a particular point in time. That process/variable, being considered, is the process towards equilibrium.” (http://wiki.answers.com)

Market equilibrium is the point in which industry offers products at the price consumers will consume without creating a surplus or a shortage of the products. Shortages cause the cost of products to go up while surpluses cause the cost to go down; finding the balance in the process is market equilibrium.

Before we can find equilibrium it is important to understand the demand and supply of a product. Being in the retail industry I could apply the concept of supply and demand on the merchandises offered in our store, For instance the demand for sandals, swimsuits, and towels is increased in the summer time while the demand for coats, boots, and gloves increased in the winter time. The changes of the seasons can lead to increase the necessity of a product instead of another. In the beginning of the season the supply of the products is high but the demand is not yet as high so there is a surplus in the products. The market tend to go to the equilibrium point where the supply is equal to the demand and this actually happened after a while because the demand for the products goes up as time passes, at the end of the season the supply is still the same but there is a low demand again, however the...