Market Equiliberating Process

Market Equilibrating Process

Market equilibrium is a point in which industries offer goods and services at prices consumers will purchase without creating a shortage of supply. Shortages drive up costs of goods, whereas surpluses drive the costs of goods down. Whereas, competition between buyers and sellers will set off an equilibrium process, from organizations with excessive inventory that will cut prices to try to undersell their competition. The results will lower prices, and the quantity demands will rise with the amount of supplies decreasing. When buyers compete for goods in short supply, this creates the prices of bids to go up to purchase the goods. As prices go up, the demand falls, and the supply rises. Economics helps consumers and manufacturers understand the way produced goods and products are in relation financially in the market system. Finding a balance in the process is market equilibrium.

The best way to find market equilibrium is to understand the supply and demand of a product. Supply is a schedule of quantities of good and service that businesses are willing to sell at various prices. This contrasts the demand that consumers are willing to purchase a various prices. Although consumers may be willing to pay the high prices for products in shortage, the market will become competitive and businesses will strategize for market dominance. One example of supply and demand is during natural disasters, which leads to increases in necessities of products and goods prior and after the disasters. Shortages such as farmed produce may be a result from disasters will leads to shortages for businesses. Businesses may choose not to offer products for sale until further notice, or sell existing stock and drive the price up because of customer demand. The willingness to sell products at high prices may seem acceptable because of competitive reasoning through persuasive mechanics.

The market system enables...