Market Equilibration Process

Abstract

This paper will give the reader information about the rising gas prices that has been going on for over 40 years. I can remember as a teenager growing up and going to the gas station in my mother’s car, a four door yellow and black Chevrolet Impala. I really never put much gas in because I didn’t need much. At that time gas was about 55 cents a gallon and I thought that was too high to pay for gas at that time. I would tell my friends if you want to ride with me you had to give up a dollar. Sometimes nobody had any money but we could come up with about a dollar, and that was all we needed to put in to ride around and go eat. But now ask me how far a dollar would get you nowhere, since at my house gas is about $3.67 a gallon and that is for regular, so you can’t put in a few dollars anymore. This paper will explain the determinants of supply and demand, efficient market theories and, surplus shortage.

Market Equilibration Process Paper

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I will first of all give you the explanation of Market Equilibration process. Market Equilibration process is a situation in which the supply of an item is exactly equal to its demand. Since there is neither surplus nor shortage in the market, price tends to remain stable in this situation. For example as the price of gas falls, the quantity demanded rises, and quantity supplied has then fallen. Here is the formula for Market Equilibrium; price= price equilibration and quantity supplied equals quantity demanded. Or, qs =qd (quantity supplied = quantity demanded.) So when the price is up supply is down and, when supply is up price goes down.

There are many determinants that affect the demand and supply of gasoline, from unemployment, change in governments, military control. “Refineries are producing a record amount of finished gasoline. Gasoline inventories are above average, though slightly below last year's levels. Refinery margins are improved from the fourth...